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New Senate bill would further delay overtime rule implementation, potentially create exemptions

By Pamela Wolf, J.D.

Republican lawmakers on September 29 introduced a bill that would change the timeline for implementation of the Labor Department’s final overtime rule—stretching across five years the increase in the salary floor for overtime pay. Although the press release announcing the Overtime Review and Reform Act, introduced by Senators Lamar Alexander (R-Tenn.), Susan Collins (R-Maine), James Lankford (R-Okla.), Tim Scott (R-S.C.), and Jeff Flake (R-Ariz.), said that it was similar to legislation introduced by Democratic Rep. Kurt Schrader of Oregon, that earlier measure, the Overtime Reform and Enhancement Act (H.R. 5813), would phase in the salary floor increases across the next three years, according to its sponsors.

The Overtime Review and Reform Act, a copy of which has not yet been made available, would stretch out over five years the DOL’s increase in the salary threshold for overtime pay from $23,660 to $47,476, which is now set to more than double on December 1, according to its sponsors. The measure would also require an “independent government watchdog” study of the overtime rule after its first year of implementation. Should the overtime rule be found to “negatively impact American workers and our economy,” the proposed legislation would exempt from further increases under the rule non-profits—including colleges and universities—as well as state and local governments, and many Medicaid- and Medicare-eligible facilities, such as nursing homes or facilities serving individuals with disabilities.

According to sponsors, the Overtime Reform and Review Act:

  • Changes the implementation timeline for the overtime rule by directing the Obama Administration to make increases in four stages over a five-year period, instead of increasing the salary threshold under which employees qualify for overtime pay from $23,660 to $47,476 on December 1, 2016, to give American workplaces time to adjust to the rule;
  • Prohibits an increase to the overtime pay threshold in 2017, giving employers and employees an opportunity to adjust to the new level while the Government Accountability Office studies the impact of the rule on American workers after the first year of implementation, 2016;
  • Prevents the administration’s automatic increases to the overtime threshold, similar to the legislation offered by House Democrats; currently, increases are set to occur automatically every three years starting in 2020, which the Overtime Reform and Review Act’s sponsor say exceeds the authority of the FLSA;
  • Requires the Labor Department and the independent Small Business Administration Office of Advocacy to work together, using the GAO’s independent report, to certify that the 2016 increase under the rule “did not increase part-time work, or negatively impact workplace flexibility, workplace benefits, career advancement opportunity, or job growth.” Unless these government agencies certify that none of these negative consequences occurred, non-profit organizations—including colleges and universities—as well as state and local governments, and workplaces that receive more than half of their revenue from Medicare or Medicaid payments (such as nursing homes or facilities serving individuals with disabilities) will automatically be exempt from the rule’s remaining increases.

“The Overtime Review and Reform Act makes urgently needed modifications to the administration’s rule, which will otherwise on December 1 force changes in overtime pay that are too high, too fast, and will result in employers, non-profits, colleges and others cutting workers’ hours, limiting their workplace benefits and flexibility, as well as costing students more in tuition,” said Senate labor committee Chairman Alexander. “This is a moderate, bipartisan approach that should be able to pass both Houses before December.”