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March 28, 2016

Costly Department Of Labor Overtime Rule Coming Soon

As Connecting the Dots reported previously, the Department of Labor (DOL) is moving ahead with its proposed changes to its overtime regulations. 

While stakeholders had expected the revisions to be issued in July, it now appears the new regulation will be released much earlier than that. That’s because, last week DOL sent the proposed regulation to the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) for their review and, with this movement, it now appears the rule could be released as early as mid-May. 

It is possible, and maybe even likely, that DOL is pushing for quick action on the rule to prevent Congress from overturning it through a Congressional Review Act (CRA) challenge. While the CRA allows Congress to reverse regulations, there is a strict timeline for CRA challenges. Specifically, a CRA resolution must be introduced within 60 legislative days in the House/60 session days in the Senate of Congress being notified of a new regulation. Additionally, a CRA resolution must be signed by the president to take effect. In other words, by issuing the rule earlier, the administration can ensure President Barack Obama is still in office when legislation to repeal the regulation comes to the White House—and therefore can veto it. 

Alternatively, if the rule were delayed and Republicans remained in control of the Congress and a Republican won the White House in November, a new GOP president could sign the regulation’s repeal into law next January. Again—moving the overtime regulation at a faster pace prevents that outcome. 

The specific content of the final rule sent to OIRA is confidential, so it is impossible to know how the rule varies from the proposed rule, which MSCI opposed. It is certain, however, that the salary thresholds will be increased. 

OIRA will accept comments and requests for meetings with stakeholders on the proposed rule for an undetermined amount of time, but there is little expectation that they will continue the process for more than 30 to 60 days. MSCI will work with its partners to file comments on the rule. 

Once the final rule is released it is likely stakeholders will have 60 to 90 days to comply with the new regulation. 

Members of the U.S. Senate and House have both introduced legislation, the Protecting Workplace Advancement and Opportunity Act, to delay the final regulation and require DOL to first conduct a “comprehensive economic analysis on the impact of mandatory overtime expansion to small businesses, nonprofits, and public employers.” Lawmakers are also exploring efforts to delay implementation of the rule by adding language to an appropriations bill restricting DOL’s ability to spend federal revenues to advance the rule. 

Click here to learn more about why MSCI opposes this rule.