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Jacquelyn Sommer

, National Council for Behavioral Health

New Legislation Would Block Federal Overtime Rule

March 24, 2016 | Workforce | Comments
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A controversial overtime pay proposal would be stopped in its tracks under new legislation introduced this week in the House and Senate. The Protecting Workplace Advancement and Opportunity Act would force the Department of Labor to nullify its proposed rule raising the salary threshold for overtime pay and conduct a full economic impact assessment before issuing a new rule. .  The introduction of the legislation came as the White House Office of Management and Budget embarked on its review of final changes to the proposed rule, the last step before a regulation becomes law.

Under current law, workers earning more than $23,660 per year do not qualify for overtime pay.  The DOL proposed rule, released last August, would raise that salary threshold to $50,440, forcing businesses to pay overtime wages to millions more workers who do not currently qualify. It would also link the salary threshold to inflation, meaning the threshold for overtime pay exemption would automatically rise each year. Proponents of the change hope that the new rules will raise wages for millions of lower-wage workers, while opponents believe that it could negatively impact small businesses and limit employees’ opportunities for advancement.

During last year’s public comment period on the proposed rule, the National Council expressed concern about its potential negative impact on community providers.  Community based mental health and addiction service providers already operate within extremely tight margins under reimbursement rates set by third-party payers that limit employers’ ability to adapt to the proposed increase Our comments noted that “we agree that modernizing and updating the FLSA exemption regulations is long overdue…[however] the untenable financial pressure resulting from the proposed changes would force many [community providers] into disastrous service reductions and program closures.”

Although the contents of the final overtime rule are unknown, advocates fear drastic consequences should the Department of Labor retain the $50,440 threshold. In the face of this uncertainty, Members of Congress from both the House and the Senate issued a joint press release expressing hope that the newly introduced legislation would support DOL in rethinking the implications of this proposed change. The legislation lays out standards that must be incorporated into an economic analysis of any new overtime pay proposal, including data on small businesses, nonprofit employers, and Medicare- or Medicaid-dependent health care providers. It also prevents DOL from linking any new salary threshold to inflation. “We agree federal overtime rules need to be changed and have said repeatedly we want to partner with the department in a serious effort to streamline and modernize overtime protections,” said House Committee on Education and the Workforce Chairman John Kline (R-MN).  “This bill will guarantee any update to federal overtime rules is done responsibly, openly, and in a way that doesn’t hold back those working the hardest to get ahead.”