House passes Bill aimed at sending new overtime rule into OT

October 3, 2016

Blog Post

Last Wednesday, the House of Representatives passed H.R. 6094, the Regulatory Relief for Small Businesses, Schools and Nonprofits Act, which would delay the implementation of the new Department of Labor (DOL) overtime regulations by six months, to June 1, 2017. The recent DOL rules provide that, effective December 1, 2016, employees who are paid up to $47,476 per year will be eligible for overtime pay. This is a significant increase from the current rule which enforces overtime pay for those making up to $23,660.

Republicans introduced the bill on September 21, providing that the additional time will give business owners more time to gradually ramp up and prepare for the change, advocating for small businesses which will especially be impacted by the new rules. Businesses in the restaurant industry in particular will be faced with significant challenges presented by increasing the overtime threshold. The bill passed the House mostly along party lines, by a vote of 246-177. On the other hand, Democrats provide their support of the new DOL overtime rules, and argue that the proposed delay is simply a disguised effort to delay the implementation of the rule to the next presidential regime which would in theory retract the new rule entirely. The Obama administration has indicated that it intends to veto the bill. The probability that this bill would have the appeal to override a veto is not likely.

The new DOL overtime rule further provides that the DOL will automatically increase the overtime threshold every three years. This aspect of the rule is also currently being challenged through a recently filed lawsuit in the Eastern District of Texas. In that suit 21 states have joined forces arguing that the DOL does not have the authority to automatically increase the threshold every three years, and that the changes will result in wide spread layoffs.

While the new overtime rules’ December 1, 2016, implementation date is fast approaching, it is apparent that much is being done in attempts to soften its blow. However, the likelihood that any of these attempts are successful before that date are slim, and business owners should accordingly be prepared for a significant increase in employees who will be eligible for overtime pay under these rules.

As a result of the Pennsylvania ruling and the limited scope of the injunction in the Texas case, for now, businesses and employers still need to plan for the Rule’s potential effective date on September 4, 2024.

In a decision that employers across the country have anxiously awaited, the Northern District Court of Texas issued a ruling on July 3, 2024, on the Federal Trade Commission’s broad Non-Compete Rule that would ban most non-compete agreements. While the court found that the FTC lacks the authority to ban all non-compete agreements, at this point the court’s decision stops short of issuing a nationwide injunction that would fully halt the Rule.

Under the DOL’s final rule, the annual salary level to qualify for exempt status will increase in two steps resulting in an increase from the current $35,568 per year to $58,656 per year by January 1, 2025.

House passes Bill aimed at sending new overtime rule into OT

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