OT rule change legislation isn’t likely to affect Dec. 1 effective date
If you were hoping that proposed legislation to phase in the new overtime rules over a three-year period would affect them going into effect next Dec. 1, you’re likely to be disappointed.
Recently, three House Democrats — led by Rep. Kurt Schrader of Oregon — put forth the Overtime Reform and Enhancement Act (OREA), which eases the pain of the new OT regs by phasing in the increase in the minimum exempt wage level between now and 2019. As you’re undoubtedly aware, the minimum exempt salary is currently set to become $47,476 per year or $913 per week.
The OREA proposes the increases step up in 4 phases:
- December 1, 2016 — $35,984 ($692 per week)
- December 1, 2017 — $39,780 ($765 per week)
- December 1, 2018 — $43,628 ($839 per week), and
- December 1, 2019 — the full $47,476 ($913 per week).
The bill would also eliminate the automatic three-year increase to the salary threshold established under the new rule.
Long odds of success
The proposal has gotten a lot of support from business groups, and it certainly would make employers’ lives easier. But it’s probably not going to change the implementation of the new rules, said Maria Greco Danaher, writing on the Ogletree Deakins blog.
Why not? First off, Congress isn’t in session; thus, there’ll be no action on the measure until after Labor Day. Then, of course, the bill has to get through both houses. And then there’s the small matter of a Presidential veto.
The real killer, however, is this, per Danaher:
Even if OREA were to be signed into law … it would not automatically overturn the rule scheduled to take effect in December. Instead, it would require the Secretary of Labor to further rewrite the existing regulation, which could take a substantial period of time (the last rewrite took nearly a year). The rewrite would not be finalized before the final rule’s current effective date of December 1, 2016.
So employers’ agendas should remain the same, Danaher says:
… Employers should continue planning for the existing rule change to become effective on December 1. In particular, employers should be aware of the change in threshold salary to $47,476 and should plan to pay overtime wages to employees who fall under that threshold. Finally, employers should work closely with human resources departments and legal counsel to effectively reclassify workers where necessary or revise wage levels to maintain current classifications.
