Bill Summary
This bill, known as the "Restoring Overtime Pay Act of 2019," aims to amend the Fair Labor Standards Act of 1938 to establish a minimum salary threshold for certain employees who are exempt from overtime compensation requirements. This threshold would be automatically updated every 3 years. The bill also acknowledges that the Secretary of Labor has the authority to define and limit the terms of exemption for executive, administrative, and professional employees, and that a salary threshold has been used since 1938. However, the current threshold is considered outdated and ineffective, as it has not kept pace with the changing economy. The bill cites a previous effort by the Secretary of Labor to update the threshold, which was met with positive feedback and support, but was ultimately invalidated by a court decision. This bill proposes a new salary threshold, based on the 40th percentile of earnings for full-time salaried workers in the lowest-wage census region, and allows for potential increases to be determined through a data set and methodology established by the Secretary of Labor. The bill also requires the Secretary to continue to use a duties test in defining and delimiting the terms for exemption. The bill also includes a provision for the Bureau of Labor Statistics to publish data on the weekly earnings of nonhourly, full-time salaried workers by census region. The effective date of this bill would be the first day of the third month after its enactment.
Possible Impacts
1. This legislation could affect people by increasing the minimum salary threshold for certain employees, making them eligible for overtime pay. This could benefit millions of workers who were previously exempt from overtime compensation.
2. The legislation could also affect employers who will be required to pay their employees a higher salary or overtime pay if they work more than 40 hours in a given workweek. This could result in increased labor costs for businesses.
3. The automatic updates to the salary threshold every 3 years could also affect employees and employers as they will have to adjust to potential changes in the minimum salary threshold. This could impact budgeting and financial planning for both parties.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1786 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 1786
To amend the Fair Labor Standards Act of 1938 to establish a minimum
salary threshold for bona fide executive, administrative, and
professional employees exempt from Federal overtime compensation
requirements, and automatically update such threshold every 3 years.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 11, 2019
Mr. Brown (for himself, Mrs. Murray, Mr. Van Hollen, Ms. Baldwin, Mr.
Durbin, Ms. Warren, Mr. Markey, Mr. Sanders, Mrs. Gillibrand, Mr.
Whitehouse, Ms. Klobuchar, Ms. Harris, Mr. Schatz, Mr. Cardin, Mr.
Wyden, Mr. Merkley, Ms. Cantwell, Mr. Blumenthal, Mr. Booker, Ms.
Duckworth, and Mr. Casey) introduced the following bill; which was read
twice and referred to the Committee on Health, Education, Labor, and
Pensions
_______________________________________________________________________
A BILL
To amend the Fair Labor Standards Act of 1938 to establish a minimum
salary threshold for bona fide executive, administrative, and
professional employees exempt from Federal overtime compensation
requirements, and automatically update such threshold every 3 years.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Restoring Overtime Pay Act of
2019''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The Fair Labor Standards Act of 1938 (29 U.S.C. 201 et
seq.) established overtime compensation requirements for
certain employees when they work more than 40 hours in a given
workweek.
(2) Under section 13(a)(1) of such Act, Congress delegated
to the Secretary of Labor the authority to define and delimit
the terms relating to the exemption for bona fide executive,
administrative, and professional employees (commonly known as
the ``white collar exemption'').
(3) For more than 75 years, the Secretary of Labor has
exercised its delegated authority to issue regulations that
define and delimit the terms relating to the white collar
exemption by applying a duties test and applying a minimum
compensation level (or salary threshold).
(4) The Secretary of Labor began utilizing a salary
threshold in the initial regulations defining and delimiting
the terms relating to the white collar exemption, which were
first issued in 1938.
(5) Congress has long approved the use of a salary
threshold by the Secretary of Labor, as demonstrated by the
fact that Congress has amended the Fair Labor Standards Act of
1938 at least 10 times since 1938 and has not precluded the
Secretary from using a salary threshold.
(6) The salary threshold became woefully out of date and
ineffective as a result of not being sufficiently updated to
keep pace with a changing economy, as evidenced by the fact
that more than 60 percent of all full-time salaried workers
earned less than the salary threshold in 1975 and less than 7
percent of these workers earned less than the salary threshold
in 2016.
(7) The salary threshold of $455 per week, or $23,660 per
year, that was in effect on May 22, 2016, was below the poverty
line for a family of 4.
(8) The Secretary of Labor updated the salary threshold on
May 23, 2016, through a final rule entitled ``Defining and
Delimiting the Exemptions for Executive, Administrative,
Professional, Outside Sales and Computer Employees'' (81 Fed.
Reg. 32391) by increasing the salary threshold to the 40th
percentile of earnings of full-time salaried employees in the
lowest-wage census region, resulting in a salary threshold of
$913 per week or $47,476 per year.
(9) The final rule would benefit more than 13,000,000
employees by providing overtime compensation protections to
4,200,000 new employees and strengthening overtime compensation
protections for 8,900,000 additional employees.
(10) The Secretary of Labor went through a thorough process
in crafting the final rule, seeking public input and conducting
extensive economic analysis, including--
(A) spending more than a year meeting with more
than 200 interested parties to obtain input before
issuing the proposed rule in 2015;
(B) considering more than 270,000 comments received
during the 60-day public comment period on the proposed
rule; and
(C) making significant changes in response to
public input before issuing the final rule.
(11) The public comments submitted to the Secretary of
Labor regarding the proposed rule were overwhelmingly positive
and supportive of the rule.
(12) The increase in the salary threshold, included in the
final rule, to the 40th percentile of earnings of full-time
salaried employees in the lowest-wage census region, resulting
in a threshold of $913 per week or $47,476 per year, was a
strong yet measured increase by almost any measure, including
as compared to--
(A) the higher salary threshold of $970 per week or
$50,440 per year, initially put forward by the
Secretary of Labor in the proposed rule;
(B) the salary threshold of $984 per week or
$51,168 per year, which would have fully accounted for
the erosion to the value of the salary threshold since
1975 due to inflation;
(C) the salary threshold of $1,122 per week or
$58,344 per year, which would have covered the same
share of all salaried workers as were covered in 1975
after accounting for changes in the economy; and
(D) the salary threshold of $1,327 per week or
$69,004 per year, which would have covered the same
percentage of all salaried workers as were covered in
1975 without accounting for changes in the economy.
(13) The United States District Court for the Eastern
District of Texas erroneously called the authority of the
Secretary of Labor under the Fair Labor Standards Act of 1938
into question when it issued a preliminary injunction enjoining
the Department of Labor from enforcing the final overtime rule.
(14) The United States District Court for the Eastern
District of Texas issued a final decision invalidating the
rule, threatening overtime protections for millions of workers.
(15) On March 7, 2019, the Secretary of Labor proposed to
update the salary threshold to $35,308, which would deny
overtime pay eligibility to approximately 3,000,000 workers who
would otherwise benefit from the higher salary threshold in the
2016 final rule.
SEC. 3. MINIMUM SALARY THRESHOLD FOR BONA FIDE EXECUTIVE,
ADMINISTRATIVE, AND PROFESSIONAL EMPLOYEES EXEMPT FROM
FEDERAL OVERTIME COMPENSATION REQUIREMENTS.
(a) In General.--Section 13 of the Fair Labor Standards Act of 1938
(29 U.S.C. 213) is amended--
(1) in subsection (a)(1)--
(A) by inserting ``subsection (k) and'' after
``subject to''; and
(B) by inserting ``(except as provided under
subsection (k)(2)(C))'' after ``Administrative
Procedure Act''; and
(2) by adding at the end the following:
``(k) Minimum Salary Threshold.--
``(1) In general.--Beginning on the effective date of the
Restoring Overtime Pay Act of 2019, the Secretary shall require
that an employee described in subsection (a)(1), as a
requirement for exemption under such subsection, be compensated
on a salary basis, or equivalent fee basis, within the meaning
of such terms in subpart G of part 541 of title 29, Code of
Federal Regulations (or any successor regulation), at a rate
per week that is not less than the salary threshold under
paragraph (2).
``(2) Salary threshold.--
``(A) In general.--Subject to subparagraphs (B) and
(C), the salary threshold shall be an amount that is
equal to the 40th percentile of earnings of full-time
salaried workers in the lowest-wage census region, as
determined by the Bureau of Labor Statistics based on
data from the second quarter of the calendar year
preceding the calendar year in which such amount takes
effect.
``(B) Increased threshold.--The Secretary may
establish, through notice and comment rulemaking under
section 553 of title 5, United States Code, a salary
threshold that is an amount that--
``(i) is greater than the 40th percentile
of earnings of the full-time salaried workers
described in subparagraph (A); and
``(ii) is calculated based on a data set
and methodology established by the Secretary
that are capable of being updated in accordance
with subparagraph (C).
``(C) Automatic updates.--
``(i) In general.--Not later than 3 years
after the salary threshold first takes effect
under subparagraph (A), and every 3 years
thereafter, or, in the case in which the
Secretary establishes an increased salary
threshold under subparagraph (B), every 3 years
after establishing such increased salary
threshold, the Secretary shall update the
amount of the salary threshold in effect under
subparagraph (A) or (B), as applicable, so that
such amount is equal to--
``(I) in the case in which the
Secretary does not establish an
increased salary threshold under
subparagraph (B), the 40th percentile
of earnings of full-time salaried
workers in the lowest-wage census
region, as determined by the Bureau of
Labor Statistics based on data from the
second quarter of the calendar year
preceding the calendar year in which
such updated amount is to take effect;
and
``(II) in the case in which the
Secretary establishes an increased
salary threshold under subparagraph
(B), the greater of--
``(aa) the 40th percentile
described in subclause (I); and
``(bb) the increased salary
threshold established under
subparagraph (B), as updated in
accordance with the data set
and methodology established by
the Secretary under
subparagraph (B)(ii).
``(ii) Nonapplicability of rulemaking.--Any
update described in this subparagraph shall not
be subject to the requirements of notice and
comment rulemaking under section 553 of title
5, United States Code.
``(D) Notice requirement.--Not later than 60 days
before a revised salary threshold under this paragraph
takes effect, the Secretary shall publish a notice
announcing the amount in the Federal Register and on
the internet website of the Department of Labor.
``(3) Duties test.--The Secretary shall, in addition to the
requirement under paragraph (1), continue to require employees
to satisfy a duties test, as prescribed by the Secretary, in
defining and delimiting the terms described in subsection
(a)(1).''.
(b) Publication of Earnings.--Not later than 21 days after the end
of each calendar quarter, the Bureau of Labor Statistics shall publish
on its public website, for each week of such quarter, data on the
weekly earnings of nonhourly, full-time salaried workers by census
region (as designated by the Bureau of the Census).
(c) Effective Date.--This Act, and the amendments made by this Act,
shall take effect on the first day of the third month that begins after
the date of enactment of this Act.
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