NATSO joined more than 400 organizations representing a broad spectrum of the national economy and employing millions of employees in expressing strong support for S. 3464, the Overtime Reform and Review Act, which would provide employers significant relief from the negative impacts of the Department of Labor’s (DOL) final overtime rule.
The legislation, introduced by Sen. Lamar Alexander (R-Tenn.), Chairman of the Senate Committee on Health, Education, Labor and Pensions, would substantially ease the burden that businesses would face in trying to comply with the DOL's new overtime rule.
The Department of Labor in May issued new overtime rules that double the minimum salary threshold that employees must earn to be exempt from overtime pay, increasing the figure to $47,476/year ($913/week), up from the previous salary of $23,660 ($455/week). This number will be automatically updated every three years based on wage inflation. The new rules do not change the so-called “duties test” applicable to employees who earn more than this salary threshold. The new salary threshold will go into effect Dec. 1, 2016, unless legislation is passed to prevent it.
S. 3464 would phase-in the DOL’s new salary threshold in four stages over five years, beginning with a substantial salary threshold increase to nearly $36,000 on Dec. 1. It also would provide employers with a one-year reprieve in 2017, allowing them to adjust for the consequences of the new rule. Further increases to the salary level would occur annually thereafter, until the threshold reaches $47,476 on Dec. 1, 2020.
The legislation further prohibits automatic increases to the salary threshold, but allows DOL to propose changes to overtime regulations in the future through the customary notice and comment process.
"While a responsible increase to the salary threshold is due, the DOL’s drastic increase of more than 100 percent to the salary threshold is too much, too fast, and will have a disproportionate impact on a wide variety of industries, sectors and geographic areas of the country,” the organizations wrote. “Small and large businesses, non-profits, local governments, and academic institutions have all made clear the severe problems the final overtime rule will have on their organizations, employees, students and communities and clients served.”
Among the letter’s signatories, which included national, state and local organizations, were the American Trucking Associations, National Association of Convenience Stores, American Hotel & Lodging Association, National Food Service Distributors Association and the Food Marketing Institute.
S. 3464 faces an uphill battle, however efforts to support legislation that modifies the rule rather than nullifies it is designed to garner more Democratic support. NATSO plans to continue pushing to have a "policy rider" attached to year-end legislation that would fund the government into 2017. It will be a difficult task to undercut the new overtime rule given President Obama's threat to veto such measures. It remains an outside possibility that the President would sign a large, comprehensive spending package even if it somewhat undercuts the overtime rule, however.
Multiple legal challenges are seeking to overturn the DOL’s new overtime rule before it is set to take effect in December. A group of 21 states filed suit in the Eastern District of Texas Sept. 20 challenging the rule arguing the agency unconstitutionally overstepped its authority to establish a federal minimum salary level for white collar workers. The U.S. Chamber of Commerce and more than 50 other business groups also filed a separate challenge in the same federal court. On Oct. 14, those business asked a Texas federal judge for a quick win in the case.
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