As the U.S. Department of Labor’s (DOL) overtime rule moves to the U.S. Office of Management and Budget for review and promulgation, members of Congress have introduced legislation to stop the rule in its tracks. The Michigan Chamber applauds the introduction of this important legislation and the involvement of a Michigan Congressional Delegation member.
As proposed, the rule recommends setting the salary threshold for exempt employees at $50,440 annually, up 113 percent from the current $23,660 annually. It also calls for annual automatic increases to the salary threshold and suggests that the duties tests should be made more stringent, requiring managers to spend at least half of their time on managerial functions.
The Michigan Chamber is strongly opposed to the proposed federal overtime rule and submitted comments to the DOL, arguing the proposal goes too high too fast and should be reconsidered.
The federal legislation, Protecting Workplace Advance and Opportunity Act, would nullify the proposed rule; require DOL to first conduct a comprehensive economic analysis of the impact of any mandatory overtime expansion to small businesses, nonprofit organizations and public employers; prohibit automatic increases in the salary threshold; and require that any future changes to the duties test must be subject to notice and comment.
The Chamber warned DOL that, because the rule change is intended to greatly increase how many salaried employees can claim overtime, and thus increase labor costs, many companies will be forced to use more part-time and entry-level workers, offer fewer promotions and/or convert salaried employees to hourly to avoid raising their pay. Further, we warned the federal government that it cannot impose a government mandate of this size and expect it not to have a negative effect on the economy or the very workers it is hoping to help.
It is still unknown when the federal government will publish the final rule or when it will take effect. Some believe the rule will work its way quickly through OMB and be published by July and take effect on or around Labor Day. Others predict the rule will be published just before Labor Day and take effect around Nov. 1. Regardless, Chamber members should familiarize themselves with the proposed rule and prepare for compliance. We suggest reviewing the legal analyses prepared by Chamber members Clark Hill and Barnes & Thornburg LLP. We also invite you to view the Michigan Chamber's comments to the DOL.
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