Proposal would phase in threshold increase under OT rule

Democratic lawmakers on July 14 introduced a bill that would initiate a three-year phase-in of the Department of Labor’s (DOL) controversial final overtime rule. Under the regulation, which was published in the Federal Register on May 23, the threshold below which FLSA overtime requirements apply will jump from $23,660 to $47,476 on December 1, 2016. The Overtime Reform and Enhancement Act, however, would instead incrementally phase in the new threshold of $47,476 over the next three years.

Specifically, the proposed legislation would alter the scheme in the final rule to instead phase-in a 50-percent increase this December. After that, the salary threshold would be raised by $74 a week until December 1, 2019, when Labor Department’s new $47,476 threshold is reached.

In a press release, the bill’s sponsors pointed out that this is the first time since 2004 that the threshold for overtime exemption will be raised.

Getting rid of the automatic increases

The National Association for the Self-Employed (NASE) quickly applauded the proposal and provided a summary of the bill, which underscored that the bill would eliminate the automatic three-year increase to the salary threshold established under the final rule. The proposal recognizes that future administrations should update the overtime rules, as required under the FLSA, but it limits the DOL’s ability to update the rules automatically. Accordingly, stakeholders would be permitted to comment on proposed changes and the DOL would be required to make sure that the rules are working as intended.

Phase-in schedule

Specifically, under the Overtime Reform and Enhancement Act, the annual increases to the salary threshold below which overtime must be paid, would alter to the following phased-in approach:

• December 1, 2016: $35,984 ($692 per week)
• December 1, 2017: $39,780 ($765 per week)
• December 1, 2018: $43,628 ($839 per week)
• December 1, 2019: $47,476 ($914 per week)

Time to adjust

Those who support the proposed legislation see it as a way to give businesses time to adjust to the new overtime requirements. “Any new rule or regulation will impact a small business’ bottom-line and they should be given fair and adequate time to make the necessary arrangements to comply,” said Katie Vlietstra, NASE Vice President for Government Relations and Public Affairs. “While the Obama Administration’s recently enacted overtime rule will have a significant impact on our nation’s small business community, from costs to labor management, this new measure will allow them a fair opportunity to make the requisite adjustments to comply with the new rule.”

Secretary of Labor Tom Perez issued a statement in response to the introduction of the Overtime Reform and Enhancement Act. He noted that “millions of workers have been waiting years for the overtime rules to catch up to reality and ensure that working people get the pay or time with their families that they deserve. This legislation would ask them to wait even longer. The President and I think that American workers have waited long enough for a fair day’s pay for a long day’s work. That’s our vision of an economy that works for everyone. By delaying implementation and removing the automatic updating of the salary threshold, the proposed legislation stands in stark contrast to that vision.” (Overtime Reform and Enhancement Act, H.R. 5813, proposed July 14, 2016.)

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