Democrats Introduce New Overtime Reform and Enhancement Act

Yesterday, Congressman Kurt Schrader (OR-5), Congressman Jim Cooper (TN-5), Congressman Henry Cuellar (TX-28) and Congressman Collin Peterson (MN-7) introduced legislation H.R. 5813, that will initiate a reasonable three-year phase-in of the Department of Labor’s new overtime rule. The new rule, announced in May, raises the threshold for employees who are exempt from overtime pay from $23,660 to $47,476, and goes into effect immediately on December 1, 2016.  The Overtime Reform and Enhancement Act, introduced yesterday, will incrementally phase in the new threshold of $47,476 over the next three years, beginning with a 50% increase this December. As the final threshold more than doubles, this is the first time since 2004 that the threshold for overtime exemption will be raised.

“The current overtime threshold is horribly outdated and needs to be raised as both employees and employers navigate our changing economy. This bill will do exactly that without disrupting the way businesses operate and employees are paid,” said Congressman Schrader. “Since the DOL’s immediate phase-in date was announced, we’ve heard from business owners and their employees who are worried about implementing this increase overnight. Without sufficient time to plan for the increase, cuts and demotions will become inevitable, and workers will actually end up making less than they made before. It’s long past time we strengthen overtime pay protections for American workers in a meaningful and effective way.”

“I am hearing from lots of Middle Tennesseans who are worried about how this new rule will affect them,” Congressman Cooper said. “The overtime rule hadn’t been adjusted in years and needed updating. But it’s good to make commonsense changes and add flexibility so the rule works for all businesses and workers can actually have a chance to get ahead. We don’t want to see lost hours or shifts in job responsibility.”

“While I believe the time has come to increase the overtime threshold, the DOL rule would put businesses in a bind and potentially lead to job loss,” said Congressman Peterson. “Both businesses and constituents in my district have expressed concern about the impact of an immediate threshold increase. A three-year phase in will provide adequate time for business to adapt to the new standard while also ensuring workers are fairly compensated.”

“Work in America has changed greatly in the last few decades,” said Congressman Cuellar. “Today, Americans are working longer hours and are more productive, but salaries and overtime provisions haven’t kept pace. New overtime standards are needed for American workers, but we must ensure new and established businesses have adequate opportunity to adapt to these new rules so as not to become overly burdensome with unintended consequences and slow job growth in communities across the country. This bill provides that necessary time for adjustment to make sure both workers and employers are ready to progress and make our economy stronger.”

U.S. Secretary of Labor Thomas E. Perez today issued the following statement in response to the introduction of the Overtime Reform and Enhancement Act:

“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.”

In a letter from the Chamber of Commerce of the United States, the Executive Vice President Government Affairs addresses Representative Schrader, “Specifically, increasing the salary threshold in one step will be highly disruptive to employers and employees. By phasing in the increase, beginning December 1, 2016 and concluding December 1, 2019, employers would be able to better plan for and absorb the impact of the increased costs imposed by this regulation, as well as have time to communicate and prepare employees for the changes that will take place. This bill would also, very importantly, prohibit automatic updates to the salary threshold. The every three year automatic update mechanism would deprive employers of any opportunity for input and result in higher salary thresholds going into effect regardless of necessity and current economic conditions.”

On December 1, 2016, the Overtime Reform and Enhancement Act will immediately increase the threshold more than 50% to $35,984. Each year following, the salary threshold will be raised by $74 per week until December 1, 2019, when we reach the DOL’s proposed $47,476 threshold.

Source: DOL, Congressman Kurt Schrader (OR-5), Chamber of Commerce of the United States

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