Congressmember Seeks to Slow

New Federal Overtime Exemption Rule

The U.S. Department of Labor (DOL) issued its Final Rule in May 2016, raising minimum salary amounts for exempt-from-overtime executive, administrative, professional, computer and outside sales employees under the Fair Labor Standards Act (FLSA). See “New Stricter Federal Requirements on Exemptions from Overtime, Employers Must Comply No Later than December 1, 2016.”

The new regulations, currently set to take effect less than four months from now, pose a sudden, 100%-plus increase in minimum salary for otherwise qualified exempt employees: from $455/week, $1,972/month, or $23,660/year to $913 per week, $3,957 per month or $47,476 annually.

On July 15, 2016, Congressmember Kurt Schrader (D – OR) introduced  H.R. 5813, the Overtime Reform and Enhancement Act (OREA), to slow the Final Rule’s implementation.  The measure seeks a four-step phase-in of the higher minimum over three years:

  • December 1, 2016 — $35,984 ($692 per week)
  • December 1, 2017 — $39,780 ($765 per week)
  • December 1, 2018 — $43,628 ($839 per week)
  • December 1, 2019 — $47,476 ($913 per week)

The bill would also eliminate the Final Rule’s automatic three year minimum salary increases that are to start in 2019,  instead requiring the DOL to comply with the standard evaluation and justification process federal rulemaking law requires.

H.R. 5813 currently does not address the Final Rule’s increase from $100,000 to $134,004 for a “highly compensated” executive to qualify for exemption.  The measure is also silent on the Final Rule’s minimum increase for motion picture exempt salaries from $695/week to $1,397/week (or equivalent for a less than six-day week).  The bill may of course be amended to address these points.

In an election year particularly, the bill’s prospects of becoming law before the Final Rule’s December 1 effective date is anyone’s guess.  Employers who plan to meet the full increase by that date can allow themselves to be pleasantly surprised if indeed H.R. 5813 succeeds in time.

If you need assistance with working any of the issues raised by these new regulations, our attorneys, Tim Bowles, Cindy Bamforth or Helena Kobrin, can help.

Helena Kobrin August 5, 2016

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