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Mounting opposition and distressful surprises are taking place nationwide as businesses and nonprofits learn about and fight against a new rule on overtime pay scheduled to take effect Dec. 1. But a fast-closing window of opportunity and White House opposition make it ever more unlikely the rule will get altered.
The rule doubles to $47,476 annually the amount of income that private-sector employees must get before they pretty much automatically are considered exempt from overtime pay. The current threshold is $23,660. The Labor Department estimates the rule will affect 4.2 million workers. Because it's billed mainly as an attempt to catch up with inflation, the Labor Department can put the rule into effect automatically, as well as include an inflation escalator from now onward.
More than 400 organizations--"from Christmas tree farmers to festival organizers," plus groups like the National Association of Home Builders (NAHB)--support legislation to phase in the rule's effects, Sen. Lamar Alexander announced Oct. 18. The Tennessee Republican is lead sponsor of legislation that would phase in the Overtime Rule's financial effects over five years, with a 50% increase in the first year. Significantly for groups like NAHB, the legislation also would kill the automatic escalator.
Alexander leads the Senate Committee on Health, Education, Labor and Pensions, so he's in good position to champion his bill. But other senators are taking a different tack. Sen. David Vitter, R-La. and chairman of the Committee on Small Business and Entrepreneurship, wrote to Labor Secretary Tom Perez on Oct. 20, urging him to delay implementation of the rule. Vitter contended the rules change "will absolutely have a detrimental impact on the ability of small businesses, non-profits, and churches to operate effectively."
"As written, this rule must not be implemented," Vitter said.
Meanwhile, a federal judge in Texas agreed on Oct. 19 to consolidate two lawsuits filed in the state, both seeking to stop the overtime rule from taking effect. One of those suits was brought by more than 50 business groups; the other was filed by officials from 21 states.
This flurry of action comes at a time when many business executives are only waking up to the fact that the rule change exists. "Inevitably, when speaking [at small-business events], I hear 'This is the first time I'm hearing about this,'" Elizabeth Milito, senior executive counsel for the National Federation of Independent Business, told The Washington Post.
Initial results of a survey launched Oct. 21 by ProSales and other Hanley Wood publications backs up Milito's findings. Of the first 100 respondents to the ongoing poll, only 26% said they knew the rule well and just 23.5% said executives at the company had formally discussed the rule change, and 72.4% of respondents said their company doesn't have an official plan for how to abide by the rule.
Lobbyists for organizations like NAHB are pushing for Congress to pass legislation to delay or slow down the effects of the overtime rule, but they face two challenges. First, Congress has only a few business days scheduled between the Nov. 8 election and the Dec. 1 enactment date. Second, the Obama administration has made clear it supports the rule and that it would veto any stand-alone legislation sidetracking the rule; for instance, Perez said in September regarding the filing of the lawsuits that his department regarded the action as "obstructionist tactics ... to prevent the Obama administration fro making sure a long day's work is rewarded with fair pay."
Thus, lobbyists say, their best hope is to attach the legislation to one of the budget bills that need to be approved by Congress before its session concludes at year end.