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Congressional Sparring Over The New Overtime Rules

The sparring in Congress is heating up over the new overtime rules issued last month by the Department of Labor (DOL). Not surprisingly, lawmakers are split along party lines. Under the new rule, which takes effect December 1, 2016, the salary threshold for workers to be considered exempt from overtime will be raised from $23,660 to $47,476 a year. Because the DOL is simply revising an existing regulation, the new rule does not require congressional approval.

During our recent Master Series, we discussed the Congressional Review Act which allows lawmakers to nullify a regulation within 60 days of its issuance. Several Republican lawmakers signed a bill earlier this month in an effort to roll back the new overtime rule under the Congressional Review Act. Unlike other legislation, a bill under the Congressional Review Act cannot be filibustered.

Republicans have vowed to try to block the new overtime rule despite lacking a veto-proof majority. In an effort to gain support, lawmakers are focusing on the damaging effects the new rule will have on universities and non-profits. These arguments were presented before the House Education and Workforce Committee where Chairman John Kline (Republican, Minnesota) stated that the DOL “chose once again to take an extreme, partisan approach that will hurt the very people they claim they want to help.”

A representative from Easter Seals in New Hampshire stated that labor costs would force them to cut back key services and it would cost approximately $265,000 to increase salaries to the new threshold. To address the issue, the non-profit budgeted $162,400 annually for overtime and on-call costs with a total financial impact in excess of $427,000.

Democrats and Labor Secretary Thomas Perez assert that the compliance costs do not outweigh the benefits that will be realized. Perez has called out Republicans for trying to hide the benefits of the new rule which would help resolve large pay disparities in the fast food and retail industries. Perez pointed out that Republicans did not present any testimony from these business sectors “because they know they don’t have a leg to stand on.”

President Obama has strongly supported the new rule claiming that it is “the single biggest step I can take through executive action to raise wages for American people.”

At this stage, attempts to block the new rule appear to be a longshot. The President can veto any bill presented under the Congressional Review Act. At this stage, Republicans do not have the necessary numbers to override a Presidential veto. We will keep you posted on developments so stay tuned.