Alexander: More Than 400 Organizations Representing Non-profits, School Boards, Cities, Roofers, Farmers, Restaurants, and Others Support Bill to Fix Obama Administration Overtime Rule
Alexander bill would stretch out the timeline for implementation of the Overtime rule and study its effects
Posted on October 18, 2016
GREENEVILLE, Oct. 18, 2016 – U.S. Sen. Lamar Alexander (R-Tenn.) today announced that more than 400 organizations—from Christmas tree farmers to festival organizers—are supporting his legislation to change the timeline for implementation of the Obama Administration’s “Time Card” overtime rule, which is set to take effect on Dec.1, 2016.
“Non-profits, local governments, and job creators across the country are supporting the Overtime Reform and Review Act because it 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,” said Senate labor committee Chairman Alexander. “This bill takes a moderate approach based on a bipartisan proposal, and with the support of Senate Democrats should be able to pass both Houses before December.”
He added: “My hope is that when we come back in November, senators on both sides of the aisle will have heard from their Boy Scout troops, from colleges and universities, from non-profits, and from workers, who say: ‘Wait a minute, this overtime rule makes no sense the way it is being implemented. Do something to change it before December 1.’ These are employers who can't just raise prices. They are dependent on tax dollars or on charitable donations. And if they are in trouble because of this rule, our communities will lose critical services: surgeries for cleft palates, scouting opportunities, church camps for underprivileged kids, and others.”
Hourly workers in this country are usually paid overtime if they work more than 40 hours per week, but salaried workers generally don't earn overtime unless they are making below a threshold set by the Labor Department and required by the Fair Labor Standards Act. Today that threshold is a little over $23,000. This new rule issued by the Obama Administration raises the threshold from just over $23,000 to over $47,000 all at once on December 1.
One recent poll found that 49 percent of business owners were not aware of the rule that goes into effect in a little over a month.
Alexander’s legislation, the Overtime Reform and Review Act, would stretch out over five years the administration's increase in the salary threshold for overtime pay. After allowing a first increase of 50 percent in December, the bill will prohibit an increase in 2017 to give employers and employees an opportunity to adjust while our independent government watchdog, the Government Accountability Office, the GAO, studies the impact of the rule on American workers after the first year of implementation. The bill would clarify that the administration does not have the authority to automatically increase the overtime threshold, which is currently set to occur automatically every three years, starting in 2020. The bill would also require a study of the rule's impact after the first year of implementation. If the study finds the impact is negative, the bill will exempt certain employers from future increases: non-profits, including churches, colleges, and universities; state and local governments; and many Medicaid- and Medicare-eligible facilities, such as nursing homes or facilities serving individuals with disabilities.
The bill is cosponsored by Senators Susan Collins (R-Maine), James Lankford (R-Okla.), Tim Scott (R-S.C.), and Jeff Flake (R-Ariz.)
Alexander’s bill is very similar to a bill introduced by House Democrat Kurt Schrader of Oregon and cosponsored by 10 Democrats and 7 Republicans.
Groups representing small business owners and job creators across the country are voicing their support for the bill:
The Partnership to Protect Workplace Opportunity (representing 409 national, state, and local organizations representing small and large businesses, nonprofits, institutions of higher education, schools, cities and counties): “Given the widespread challenges this regulation will impose on employers and their employees, the PPWO welcomes the introduction of S. 3464. This reasonable legislation would phase-in the DOL’s new salary threshold in four stages over five years, starting with a substantial salary threshold increase to approximately $36,000 on December 1, 2016, followed by a “pause year” in 2017 to allow employers to review and adjust for the consequences of this new rule. Further increases to the salary level would occur annually thereafter, until reaching the final rule’s new threshold of $47,476 on December 1, 2020. Equally important is that the bill prohibits the final rule’s automatic increases to the salary threshold, yet allows the DOL to propose changes to overtime regulations in the future through the customary notice and comment process. In addition, S. 3464 recognizes the impact the new regulation will have on the most vulnerable employers. The bill specifies that increases after 2016 will not go into effect for nonprofits, colleges and universities, Medicare and Medicaid dependent health care providers, and state and local governments unless the Administration can certify that the 2016 increase did not negatively impact these organizations. The PPWO strongly supports the comprehensive approach this bill takes in blocking the worst impacts of the overtime regulation from taking effect.”
National Federation of Independent Business: “NFIB believes that the overtime rule will have a substantial negative effect on small businesses and their employees. The rule will result in higher costs for small businesses. At the same time, employees will not necessarily increase wages because small business owners will limit employees to 40 hours per week and switch them from salaried positions to hourly jobs. Converting employees to hourly wages also means reduced benefits and opportunities for career growth. Finally, employers need additional time to take measures to comply with the changes to the overtime rule. Fortunately, S. 3464 would slow the implementation of the overtime rule. Gradual increases to the threshold would be implemented annually after a pause year in 2017 when the initial impact of the regulation will be fully reviewed and analyzed. The full amount of the proposed increase would not take effect until the year 2020. Lastly, S. 3464 would require DOL to initiate a new notice and comment rulemaking for any future changes to the overtime threshold. The Overtime Reform and Review Act is a solution that will allow small businesses more time to comply with the overtime changes.”
International Festivals and Events Association: “The festivals and events that make up our industry are heavily not-for-profit, volunteer driven, and made up of small, dedicated staffs with a ‘whatever it takes’ attitude that makes their events and the subsequent community return possible. They are not the highest paid employees in the country, but their passion for what they produce and provide to our communities is their driving factor. The vast majority of these organizations are events that cannot operate without flexible hours, nor afford the drastic increases that the DOL is planning to mandate. The result across our industry, if a more reasonable option is not provided, will be lost jobs, events that are forced to close their doors, and communities in a world of need that lose their most valued opportunities to come together.
National Association of Home Builders: “The Overtime Reform and Review Act will provide the employer community with a reasonable timetable to comply with the U.S. Department of Labor’s (DOL) unprecedented increase in overtime eligibility for “white collar” employees. Under the new rules, the Administration doubled the annual salary level used in determining whether an employee qualifies for the exemption, from $23,660 to $47,476. By phasing in the increase, 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.”
International Franchise Association: “On behalf of the International Franchise Association (IFA), the world's oldest and largest organization representing America’s 733,000 franchise establishments and the nearly 7.6 million people they employ, I write this letter in strong support of your legislation, S. 3464, the Overtime Reform and Review Act. This bill substantially addresses the concerns held by franchise business owners and their employees with the U.S. Department of Labor’s (DOL) new overtime regulation, who are faced with a December 1, 2016 deadline to comply with the DOL’s extreme doubling of the salary threshold.”
National Restaurant Association: “As the December 1 deadline nears, we thank Chairman Alexander and Senators Lankford, Scott, Flake and Collins for their leadership in introducing this critical legislation. Delaying the implementation date, allowing for a more gradual phase-in period, eliminating automatic indexing and carefully studying the impact this rule will have is crucial for small businesses navigating yet another burdensome regulation”
WorldatWork: “WorldatWork, a nonprofit human resources association for professionals and organizations focused on compensation, benefits and total rewards, is writing today in support of the Overtime Reform and Review Act (S. 3464). WorldatWork is encouraged by the growing concern regarding the U.S. Department of Labor’s final overtime rule. WorldatWork supports an increase to the salary threshold, but the DOL’s drastic increase of more than 100 percent is too much, too fast.”
National Council of Chain Restaurants: “S. 3464 would allow all employers around the country, including businesses small and large, colleges and non-profit organizations, and their workers, additional time and clarity in their ongoing preparations for the Labor Department’s onerous overtime pay regulation….The Labor Department, by setting the salary threshold at the 40th percentile of weekly earnings for full-time salaried workers failed to take into account the significant cost of living differences in communities around the country. Such a radical change is creating extraordinary challenges for employers, including chain restaurants. Many employers are just learning about the regulations and are struggling to make difficult changes to their operations, which will have major implications for their team members, in an unreasonably short period of time. S. 3464, by adjusting the regulation’s salary threshold deadlines and providing additional time for compliance as well as needed study of the regulations’ impacts and effectiveness, provides a balanced and timely response to the significant shortcomings in the existing rules.
National Association for the Self-Employed: “Given the widespread challenges this regulation will impose on micro-business and small business owners, the NASE welcomes the introduction of S. 3464. This reasonable legislation would phase-in the DOL’s new salary threshold in four stages over five years, starting with a substantial salary threshold increase to approximately $36,000 on December 1, 2016, followed by a “pause year” in 2017 to allow employers to review and adjust for the consequences of this new rule. Further increases to the salary level would occur annually thereafter, until reaching the final rule’s new threshold of $47,476 on December 1, 2020. The NASE strongly supports the comprehensive approach this bill takes in blocking the worst impacts of the overtime regulation from taking effect.”
National Association of Wholesaler-Distributors: “Employers in the wholesale distribution industry are currently struggling to implement the new overtime rules, and their deep concerns are elevated by the recognition that six months is simply not enough time to effectively perform all the tasks associated with any rational implementation of the 100% - plus increase in the salary threshold….The regulation’s December 1, 2016 effective date is rapidly approaching. It is therefore imperative that the Senate pass and both houses of Congress complete action on the Overtime Reform and Review Act as expeditiously as possible.
National Retail Federation: “S. 3464 would give employers more time to implement and come into compliance with DOL’s final rule by gradually phasing in the new salary threshold over five years. This compromise approach provides a substantial increase to the threshold in 2016 while ensuring that future increases are not unduly burdensome for non-profits and the public sector. In addition, the legislation would prohibit automatic increases to the salary threshold without engaging stakeholder input and examining economic conditions through notice and comment rulemaking. These commonsense changes will help mitigate the substantial harm inflicted by the final rule on millions of workplaces across the country.”
International Health, Racquet, & Sportsclub Association: “IHRSA agrees that phasing in the salary increase threshold over 5 years and in 4 stages, eliminating automatic raises in the threshold, and studying the effects of the overtime rule – e.g. an increase in part-time work or impact on workplace benefits – provides necessary relief. Our health club owners and operators believe that employees and employers alike are best served with a system that promotes maximum flexibility in structuring employee hours, career advancement opportunities for employees, and clarity for employers when classifying employees.”
Society for Human Resource Management: “This legislation would still provide for a salary threshold increase to the $47,476 level, but would provide the time necessary for employers to ensure compliance, communicate changes, and accurately reclassify employees…. SHRM supports this legislation to comprehensively address the overtime rule in a way that benefits both employers and employees. Given the rapidly approaching December 1st deadline, time is of the essence for congressional leaders to take action on this legislation.”
American Supply Association: “Lowering the threshold to $35,984 and phasing in further increases over the course of three years is the right thing to do. By failing to address this looming administrative and financial catastrophe for small businesses, those that this regulation is intended to help, may be harmed as a result. This legislation would bring the relief needed.”
National Association of Professional Insurance Agents: “PIA represents independent insurance agents in all 50 states, Puerto Rico, and the District of Columbia. As most of our members are small business owners, they are greatly troubled by the final revisions to the overtime rule and the burdens those revisions have imposed on consumer access to the professional services and guidance that agents provide…PIA members are insurance professionals that provide personal support, advice, and counsel to their customers. In this ever-evolving insurance environment, it is critical that insurance agents and brokers continue to be available to consumers and the business community; the final overtime rule revisions will significantly change the way small businesses operate.”
For access to this release and the senator’s other statements, click here.