The Overtime Reform & Enhancement Act Would Provide Relief For Businesses, But It’s Not Going to Pass

Text of Legislation – Overtime Reform & Enhancement Act

Hold onto your hats, but don’t hold your breath. Four Democrat Representatives (Kurt Schrader, D-Ore., Jim Cooper, D-Tenn., Henry Cuellar, D-Texas and Collin Peterson, D-Minn.) have introduced legislation that would:

  1. Reduce the minimum salary required to classify an employee as exempt from the overtime provisions of the Fair Labor Standards Act; and
  2. Require the Secretary of the United States Department of Labor to engage in formal rulemaking before adjusting the minimum salary threshold (instead of automatically adjusting the minimum salary based on certain financial indices, as required by the current rule).

The Overtime Reform & Enhancement Act will not become law unless it is approved by both houses of Congress and then NOT vetoed by President Obama, who supports the new DOL Overtime Rule. Even if the Bill were signed into law, it would not automatically overturn the new Overtime Rule. Instead, it would require the Secretary of Labor to rewrite the existing regulation, which was first introduced in June 2015 and took 11 months to finalize. It’s unlikely this could be accomplished before December 2016.

Businesses should continue planning for the existing rule change, in which the minimum salary that must be paid to FLSA exempt employees will be increased from $23,660 to $47,476 in December of this year.

If the legislation succeeds, the minimum salary would instead be increased to $35,984 in December 2016. Thereafter, it would adjust upwards annually, and finally reach $47,476 in December 2019, which would be the maximum increase without another formal rulemaking process.

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