Alexander, Collins, Lankford, Scott, Flake Introduce Bill to Protect Workers, Non-Profits, Colleges, Local Governments from Dec. 1 Overtime Rule

WASHINGTON, D.C., Sept. 29 – Sens. Lamar Alexander (R-Tenn.), Susan Collins (R-Maine), James Lankford (R-Okla.), Tim Scott (R-S.C.), and Jeff Flake (R-Ariz.) today introduced legislation similar to a bill introduced by Democratic Rep. Kurt Schrader of Oregon to change the timeline for implementation of the Obama Administration’s “Time Card” overtime rule – set to take effect on Dec.1, 2016.

The legislation would stretch out over five years the administration’s increase in the salary threshold for overtime pay from $23,660 to $47,476, which is now set to more than double at once on December 1. The bill would also require an independent government watchdog study of the rule after the first year of implementation, and if the rule is found to negatively impact American workers and our economy, non-profits—including colleges and universities—along with state and local governments and many Medicaid- and Medicare-eligible facilities such as nursing homes or facilities serving individuals with disabilities will be exempt from any further increases under the rule.

“The Overtime Reform and Review Act 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 is a moderate, bipartisan approach that should be able to pass both Houses before December.”

“The Department of Labor’s overtime rule will be extremely damaging to small businesses, universities, nonprofit organizations, and service industries, particularly in rural states like Maine,” said Senator Collins.  “While it is time for a reasonable update in the threshold, doubling the threshold overnight will hurt workers and employers alike and limit the services provided by nonprofits and educational institutions.  Our legislation takes a common-sense, bipartisan approach that would phase-in an increase to the overtime threshold over five years, providing businesses with additional time to prepare for this major federal rule change.”

“This federal overtime rule is devastating for small businesses, colleges and nonprofits all across America, but particularly in states with a low cost-of-living,” said Senator Lankford. “The economic realities and regional cost of living differences that exist throughout the country were completely ignored in favor of yet another one-size-fits-all approach by this administration. I have been told from small business owners, colleges and nonprofits that this federal overtime rule will quickly lead to job loss, increased tuition, and the reduction of charitable services. I think this rule should be pulled entirely, but at least its implementation should be delayed or slowed.”

A poll released this month by payroll servicer Paychex found that 49 percent of business owners were not aware of the rule that goes into effect December 1. 

Specifically, the Overtime Reform and Review Act:

• Changes the implementation timeline for the administration’s “Time Card” rule—rather than increasing the salary threshold under which employees qualify for overtime pay from $23,660 to $47,476 on December 1, 2016, the bill would instead direct the administration to make increases in four stages over a five-year period to give American workplaces time to adjust to the rule;

• Prohibits an increase to the overtime pay threshold in 2017, giving employers and employees an opportunity to adjust to the new level while our independent government watchdog – the Government Accountability Office (GAO) – studies the impact of the rule on American workers after the first year of implementation, 2016;

• Prevents the Administration’s automatic increases to the overtime threshold, similar to the legislation offered by House Democrats; currently, increases are set to occur automatically every three years starting in 2020, exceeding the authority of the Fair Labor Standard Act; 

• Requires the Department of Labor and the independent Small Business Administration Office of Advocacy to work together, using GAO’s independent report, to certify that the 2016 increase under the rule did not increase part-time work, or negatively impact workplace flexibility, workplace benefits, career advancement opportunity, or job growth; Unless these government agencies certify that none of these negative consequences occurred, non-profit organizations—including colleges and universities—as well as state and local governments, and workplaces that receive more than half of their revenue from Medicare or Medicaid payments – such as nursing homes or facilities serving individuals with disabilities – will automatically be exempt from the rule’s remaining increases.  

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For access to this release and Chairman Alexander’s other statements, click here.