Legislative Update: DOL Overtime Rule

As you are aware, the U.S. Department of Labor (DOL) recently proposed amendments to its overtime rule, which will greatly affect you, your employees and your business. Last week, efforts to both advance and halt the bill were taken; this issue update serves to provide a summary of both the proposal and recent regulatory and legislative actions on the overtime rule.

Summary of Overtime Proposal

On June 30, DOL issued its initial language amending the overtime rules set forth in the Fair Labor Standards Act (FLSA). The proposal requires overtime pay be granted to employees who earn less than $50,440 a year (or $970 per week) – more than double the current threshold of $23,660 per year (or $455 per week). Further, the language permanently links wage increases to insure that 40 percent of the working population is eligible for overtime pay. While the proposal did not amend the “duties” test, DOL solicited questions from the public about how best to alter the current “duties” exemption.

Regulatory Developments

On March 17, DOL forwarded its most updated language to the Office of Management and Budget (OMB) and Office of Information and Regulatory Affairs (OIRA) for review. This completes the last mandatory step the DOL has to take before issuing the final regulations. This means the final overtime rules could be released as early as April or May, followed by a 60- or 90-day implementation period.

Legislative Developments

On the same day (March 17), legislation was introduced calling for the overtime rule to be stopped in its tracks. The Protecting Workplace Advancement and Opportunity Act, introduced by Sens. Tim Scott (R-SC) and Lamar Alexander (R-TN) (S. 2707) and Reps. Tim Walberg (R-MI-07) and John Kline (R-MN-02) (H.R. 4773), does the following:

  • Nullifies the proposed rule;
  • Requires DOL to conduct a comprehensive economic analysis on the impact of mandatory overtime expansion on small businesses, nonprofit organizations and public employers;
  • Prohibits automatic increases in the salary threshold; and
  • Requires that proposed amendments to the duties test be subject to the notice and comment period.

While the bill is sponsored by both the House and Senate labor committee chairmen, it is not likely to garner the 60 votes needed to pass the Senate. Click here to view the bill in its entirety.

CFA members should expect final regulations to be issued in the next several months and prepare their employee schedules and salaries accordingly.

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