A new bill was introduced on September 29th by Republican senators, which would make changes to the overtime bill introduced by the Obama administration back in July. The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (or H.R. 6094) passed in the House of Representatives 246 to 177 and will delay the Department of Labor’s final rule until July 2017. The changes to current overtime laws were supposed to go into effect on December 1st, but the updated bill seeks to spread out these changes over the next 5 years, rather than everything going into effect all at one time. Not only would the bill raise the overtime threshold gradually from $23,600 to $47,476 through the 5 years, but it would also require an “independent government watchdog study” of the rule after it’s the first year in effect. If the rule is found to negatively impact “American workers and our economy, non-profits—including colleges and universities—along with state and local governments and many Medicaid- and Medicare-eligible facilities such as nursing homes or facilities serving individuals with disabilities will be exempt from any further increases under the rule.” Additionally, it would prevent a possible threshold raise in 2017, as well as the automatic increases that were supposed to occur every 3 years.
Senators Lamar Alexander (R-TN), Susan Collins (R-ME), James Lankford (R-OK), Tim Scott (R-SC), and Jeff Flake (R-AZ) introduced the legislation in fear that the sudden doubling of the salary threshold would be too extreme, and therefore detrimental to various employers. Senate Labor Committee Chairman Alexander states, “the Overtime Reform and Review 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….This is a moderate, bipartisan approach that should be able to pass both Houses before December.” Senator Collins adds, “The Department of Labor’s overtime rule will be extremely damaging to small businesses, universities, nonprofit organizations, and service industries, particularly in rural states like Maine…While it is time for a reasonable update in the threshold, doubling the threshold overnight will hurt workers and employers alike and limit the services provided by nonprofits and educational institutions. Our legislation takes a common-sense, bipartisan approach that would phase-in an increase to the overtime threshold over five years, providing businesses with additional time to prepare for this major federal rule change.” Similarly, Senator Lankford states, “This federal overtime rule is devastating for small businesses, colleges and nonprofits all across America, but particularly in states with a low cost-of-living…The economic realities and regional cost of living differences that exist throughout the country were completely ignored in favor of yet another one-size-fits-all approach by this administration. I have been told from small business owners, colleges and nonprofits that this federal overtime rule will quickly lead to job loss, increased tuition, and the reduction of charitable services. I think this rule should be pulled entirely, but at least its implementation should be delayed or slowed.”
A copy of the Overtime Review and Reform Act has not yet been made available to read, but proponents of the bill (i.e. employees) will surely be disappointed by its terms. Meanwhile, letters of support for the revised bill and its originators have been pouring in. The White House issued a Statement of Administration Policy on September 27th, strongly opposing H.R. 6094. The statement gives facts supporting the necessity of the December 1st implementation. Additionally, the statement clearly and in no uncertain terms indicates that if the bill reaches President Obama’s desk, he will veto it. Perhaps the most powerful text in the statement reads, “While this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers. With a strong economy and labor market, now is a good time for employers to provide these essential protections for workers, who cannot afford to wait.”