Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Wage-related bills have been popular in Congress this week. While none of these measures are expected to be enacted during this election year, they provide clues to the battle that lies ahead for the Department of Labor's final overtime rule, and highlight the pay-related issues that might gain traction at the state and local levels.
DOL Overtime Rule
Likely in response to the news that the DOL's much-anticipated white collar overtime exemption rule is one step closer to publication and under review by the White House Office of Management and Budget, Republican members of the House and Senate introduced a bill on Thursday that would effectively invalidate it. The Protecting Workplace Advancement and Opportunity Act, introduced in the Senate by Sen. Tim Scott (R-SC) and in the House by Rep. Tim Walberg (R-MI), would require the Secretary of Labor to nullify the proposal and conduct an economic analysis to determine its impact on certain employers before implementation.
The "findings" portion of the bill criticizes the proposed rule, which would, among other things, increase the salary level triggering the Fair Labor Standards Act "white collar" exemptions and provide for automatic increases to this salary level. The stated problems with the proposed overtime rule include:
- The Secretary of Labor significantly underestimated the cost of compliance with the rule.
- The Secretary of Labor did not consider the potential impact of the proposal on workplace flexibility.
- The Secretary of Labor did not analyze the potential impact of the proposed rule on multistate employers. These companies operate in multiple states with different costs of living and different salary scales, and therefore "face costs and unique complications" in reclassifying thousands of employees in multiple jurisdictions.
- The Secretary of Labor lacks the authority to increase the salary threshold on an annual or other basis "without conducting notice and comment rulemaking with respect to each change in accordance with section 553 14 of title 5, United States Code."
- Although the proposed rule indicates changes to the duties test might be included in the final rule, these changes would be made without the requisite notice and comment period and procedures.
To this end, the bill provides that the final rule not be enforced, and that if the DOL seeks to promulgate a substantially similar rule, it must first conduct a more thorough analysis of its impact, as well as provide for notice and comment on all changes.
Even if this bill is passed by both chambers, however, the President would undoubtedly veto it. The bill, therefore, is more of a symbolic gesture, and indicates the final rule will face significant opposition once published in the Federal Register, which is estimated to occur in or around May of this year.
In other wage and hour legislative news, Rep. Rosa DeLauro (D-CT) and Sen. Sherrod Brown (D-OH) introduced a bill on Wednesday targeting wage theft. The Wage Theft Prevention and Wage Recovery Act (H.R. 4763, S. 2697) would impose a number of pay-related requirements on employers, including requiring employers to make initial disclosures of the terms of employment to all employees; requiring employers to provide final paychecks within 14 days of separation from employment or by the payday for the pay period, whichever is earlier; increasing damages for FLSA violations; and allowing employees to recover additional compensation in the event the employer is found to be in violation of wage payment laws.
While this bill is not expected to advance this year, the issue of wage theft has gained traction at the local level. In fact, during the news conference announcing his new legislation, Sen. Brown noted that Cincinnati recently became the first city in Ohio to enact a wage theft ordinance. Therefore, while the federal Wage Theft Prevention and Wage Recovery Act might not become law this year, it is entirely possible that other localities will follow Cincinnati's lead.