SIOP in Washington: Advocating for I-O in Federal Public Policy

Jill Bradley-Geist and Laura Uttley

Update on the Department of Labor’s Overtime Rule

On May 18, the Department of Labor (DOL) released its final rule to modify the existing overtime pay regulations covered under the Fair Labor Standards Act (FLSA).  The final rule, which was officially published in the Federal Register on May 23, raised the salary threshold for salaried executive, administrative, and professional employees to qualify for overtime pay, from $455 per week ($23,660 per year) to an estimated $913 per week ($47,476 per year).  Employers are expected to be in compliance by the time the rule goes into effect on December 1, 2016.

DOL received nearly 300,000 comments on its July 2015 Notice of Proposed Rulemaking updating the salary threshold for overtime pay, outlining concerns and impacts of the proposed rule.  In the end, DOL did not alter the final rule significantly from the proposed rule.  DOL slightly lowered the salary threshold from the proposed $50,440 to the final $47,476 annual salary level.  According to DOL, this new threshold reflects the 40^th percentile of full-time salaried workers in the lowest-income Census region in the country.  Another modification is that the final rule mandates the salary threshold be automatically updated every three years to reflect the 40^th percentile level of salaried workers in the lowest-wage region.
 

According to the DOL, employers have several options available to comply with the updated salary threshold, including:

< >Raising salaries to the new threshold;Limiting work hours to 40 hours per week;Offering comp-time in place of overtime pay (for public institutions);Redistributing workload to minimize overtime;Paying overtime to employees whose salaries are below the threshold; andAdjusting base pay and paying overtime for employees who work a small number of hours of overtime on a predictable schedule. 

Congressional Pushback

On June 7, the Senate Committee on Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) and Senate Committee on Homeland Security and Governmental Affairs Chairman Ron Johnson (R-WI) introduced a joint resolution, along with 43 Republican Senate co-sponsors, aimed at blocking the implementation of the Department of Labor’s final rule to raise the salary threshold for employees eligible for overtime pay.  On the House side, House Committee on Education and the Workforce’s Subcommittee on Higher Education and Workforce Training Chairwoman Virginia Foxx (R-NC) introduced the House companion resolution on June 16.  Twenty-six Republican Members of the House have co-sponsored the resolution.
 
The resolution of congressional disapproval utilizes a procedural tactic, the Congressional Review Act, which allows Congress to overturn the executive branch’s regulatory proposal within 60 days of release if the resolution passes both chambers and is signed by the President.  If this resolution reaches the President’s desk for signature, President Obama would likely veto the resolution, sending it back to Congress where it would need a two-thirds vote of both chambers to become law.  Given this challenge, the likelihood for a legislative block to the new overtime rule is low.

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