WASHINGTON, D.C. — Retailers may get a slight reprieve from new federal overtime rule set to go into effect Dec. 1.
U.S. Reps. Kurt Schrader (D-Oregon), Jim Cooper (D-Tennessee), Henry Cuellar (D-Texas) and Collin Peterson (D-Minnesota) introduced legislation that will initiate a three-year phase-in of the Department of Labor's (DOL) new overtime rule.
The new rule raises the threshold for employees who are exempt from overtime pay from $23,660 to $47,476.
The proposed Overtime Reform and Enhancement Act will incrementally phase in the new threshold of $47,476 over the next three years, beginning with a 50-percent increase this December. Each year following, the salary threshold will be raised by $74 per week until Dec. 1, 2019, when it reaches the DOL's proposed $47,476 threshold.
As the final threshold more than doubles, this is the first time since 2004 that the threshold for overtime exemption will be raised.
"The current overtime threshold is horribly outdated and needs to be raised as both employees and employers navigate our changing economy. This bill will do exactly that without disrupting the way businesses operate and employees are paid," Schrader said. "Since the DOL's immediate phase-in date was announced, we've heard from business owners and their employees who are worried about implementing this increase overnight.
"Without sufficient time to plan for the increase, cuts and demotions will become inevitable, and workers will actually end up making less than they made before. It's long past time we strengthen overtime pay protections for American workers in a meaningful and effective way," he added.
The proposed phase-in was welcome news to the retail industry.
"Retailers applaud Congressman Schrader for stepping in to ease the pain that the enormous and sudden changes this rule will cause employees and employers, and we urge Congress to take action quickly," said Jennifer Safavian, executive vice president for government affairs at the Retail Industry Leaders Association. "By making such dramatic changes to how employees are classified, the Department of Labor is hurting those that it claims it is trying to help. For retail employees, the changes will force countless employees to be reclassified from salaried to hourly, robbing them of the flexibility and upward mobility they currently value."
The National Retail Federation (NRF) applauded the legislation, saying the measure would mitigate the substantial damage the requirements will inflict on millions of workplaces across the country.
"Representative Schrader's legislation will help blunt the damage to America's job creators that the reckless new overtime rules will cause unless Congress takes action by December," said NRF Senior Vice President for Government Relations David French. "The labor department's changes to the overtime threshold are too much, too fast for both employers and employees to adjust to without serious negative consequences for both. The Schrader bill addresses the 'too fast' part of the problem and we support it."