"Are you prepared for Overtime Rule Changes?" with image of a clock. Federal contractors need to be prepared for new affirmative action obligationsThe Department of Labor’s (DOL) controversial proposed rule to significantly increase the number of employees who qualify for overtime pay has been submitted for review to the Office of Management and Budget (OMB). This is the last step to becoming finalized and can take between 30-60 days. In response to the DOL fast tracking of the final rule, the House and Senate Republicans, having serious concerns regarding the unintended repercussions of the overtime pay rule, have stepped in and introduced legislation to stop it.

Facts about the final rule as proposed:

  • Raises the income threshold for overtime exempt employees from $455 to an anticipated $970 per week
  • The estimated change would increase overtime exempt employee salaries from $23,660 to $50,440 annually
  • Under new salary requirements, the DOL states that nearly 5 million employees, that are currently exempt, will be eligible for overtime compensation and minimum wage
  • To match inflation, the final rule will include an automatic annual adjustment provision requiring that salary thresholds be adjusted every year

The bill to stop the final rule is substantial for several reasons:

  • The bill could create a significant delay, which would open the door for a newly elected Republican President to veto the bill entirely
  • The bill recommends that further economic research must be conducted to assess the impact that the proposed rule will have on the lowest-paid employees and on employers who will be forced to pay increased wages and overtime to newly qualified non-exempt workers
  • Prohibit automatic increases in the salary threshold
  • Employers are unsure of the repercussions of the proposed overtime changes and this bill will help to provide some answers
  • The bill will require future changes to the duties test to be subject to comment and notice

Takeaway

There are no definitive answers as to when or if the overtime rule will be put into place or if the bill will prevent it from passing. What we know is there are serious issues with the final rule and the Obama Administration is doing everything in their power to ensure the overtime rule passes before a new President or Congress has an opportunity to review it in 2017.Due to the push to fast-track the proposed rule on overtime pay, we recommend employers take a proactive approach and prepare for it to be passed, meaning they should access changes that would need to be made in regards to their current pay practices as well as the financial impact to their business. We will continue to bring you up to date information regarding the overtime rule, and if you have any questions, you can contact Career Resources at info@crincorporated.com.