There's been another development in the debate about the recent update to the overtime regulation. The adjustment, which essentially doubles the salary threshold from $455 to $913 per week and $23,660 to $47,476 per year, has states and independent organizations up in arms. These parties believe the adjustment is an overstep on the part of the U.S. Department of Labor and that the change will be more than some companies are ready to handle financially.
Although 21 states and several interest groups filed suit against the federal agency on Sep. 20, the House of Representatives has taken further action.
A new bill
On Sept. 28, the House of Representatives passed a bill – H.R. 6094 Relief for Small Businesses, Schools and Nonprofits Act – that would change the effective date of the new overtime rule from Dec. 1, 2017 to June 1, 2017. This legal step came as many businesses claimed the original deadline would force them to lay off workers.
"The President has already said he would veto the House's new bill."
The future of H.R. 6094
To become law, the bill must pass the Senate before being signed by President Obama. At the time of publishing, it was unclear if the former party would vote on the proposed regulation, according to Ogletree Deakins. On the other hand, the White House released a Statement of Administration Policy on Sep. 27 that includes the President's vow to veto the bill if it's presented to him in the future.
Consequences for businesses
Organizations across the country are beginning to prepare for the current effective date of the overtime regulation adjustment. Since the chances of the deadline being extended are slim, this is a smart move for companies and their human resources teams.
Businesses are split between what the alteration will mean for their enterprise. Many leaders are stating they'll have to cut jobs to reduce the number of people eligible for additional pay. These losses could come as a result of the updated duties test, which gives further clarification about what tasks and responsibilities will make employees exempt from overtime. In the past, organizations frequently changed job descriptions to make it seem as if lower-level workers were performing higher-level and more expert duties, thus keeping them for extra money, according to Fast Company.
Adversely, the overtime adjustment could cause companies to hire more people. This action would divide work more evenly among employees, reducing the number of workers who are eligible for the additional compensation, according to the Society for Human Resource Management.
At the end of the day, businesses have a couple of options to make sure they're compliant with the DOL's new rule:
- Raise workers' salaries to make them exempt from overtime.
- Pay the mandated time-and-a-half overtime for those who work extra hours.
- Make sure employees aren't working overtime.
Since the DOL's overtime adjustment was passed in May 2016, there has been unrest among businesses as well as states themselves. This is sure to be an ongoing debate as the effective deadline looms in the distance. It's crucial for companies and their HR teams to be prepared for this upcoming date, especially if either the Senate or President Obama vetoes the recent bill.