Support Grows for Bill to Fix Overtime Rule

November 17, 2016

AA017956With the Department of Labor’s (DOL) new overtime rule scheduled to go into effect in a matter of weeks (Dec. 1, 2016), legislation in the Senate is gaining traction that would phase-in the effective date over five years starting in 2018 and remove the final rule’s indexing provision.

The Overtime Reform and Review Act (S. 3464), from Sens. Lamar Alexander (R-Tenn.), Susan Collins (R-Maine), James Lankford (R-Okla.), Tim Scott (R-S.C.), and Jeff Flake (R-Ariz.) was also recently supported by Sen. Angus King ((I-ME) expanding the bill’s bipartisan support. S. 3464 also would require the Government Accountability Office (GAO) to conduct a report during the rule’s first year to assess its economic effects.

On May 18, 2016, the DOL issued the final version of a much-anticipated overtime exemption rule, raising the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (FLSA’s) “white collar” exemption to $47,476 per year, which will automatically extend overtime pay to more than four million workers within the first year of implementation. Under the new final rule, the exempt employee threshold of $47,476 is less than the proposed rule’s $50,440, but slightly more than double the old threshold of $23,660.

NSBA is urging small-business owners to contact their lawmakers TODAY and urge their support of the Overtime Reform and Review Act.

While the House passed a six-month delay bill earlier in the year and the Senate is working on its own language, President Obama has promised a veto of either bill if passed by both chambers. Further complicating matters is a court case over the rule currently awaiting a ruling from a federal court in Texas. Opponents of the overtime rule are hopeful that the court will issue an injunction against implementation of the rule, giving the incoming Congress and administration time to pass delay legislation.

When the DOL’s regulations were first proposed, NSBA submitted comments stating: the cost of compliance for small businesses will be much greater than the DOL estimate; changes to the duties test are likely to miss the fact that there is no bright line between “exempt” and “non-exempt” in the typical small business workplace; the creation of new hourly reporting and tracking requirements are likely to be a disproportionate burden on smaller firms; the rule could force struggling small firms to reduce employee hours; and employee morale will take a significant hit where employees must be “downgraded” from exempt managers to non-exempt workers. Please click here to download NSBA’s comment letter.