Phasing in the Overtime Rule is No Victory for Small Businesses

The Department of Labor’s (DOL) new overtime rule is scheduled to take effect on December 1st and has many small businesses scrambling to find a solution. The overtime rule doubles the salary threshold – from $23,600 to $47,476 a year – at which employers must pay their workers overtime. Businesses will mostly likely convert an estimated 4 million professional salaried employees into hourly workers to offset the new regulatory cost.

Republicans in the House of Representatives have acted to stop the rule from taking effect. Heritage Action supported House Republican efforts to either repeal the rule or at least delay it for a new administration. On September 28th, the House passed Rep. Tim Walberg’s (R-MI) Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094) by a vote of 246 to 177 with 5 Democrats joining all Republicans in support.

Instead of following the House’s lead, the next day, Senate Labor Chairman Lamar Alexander (R-TN) introduced a bill to phase-in the overtime rule rather than eliminate or delay it. Shockingly, small business advocacy groups including the National Restaurant Association are encouraging members to support the Alexander bill rather than the stronger House passed Walberg bill. But phasing in the overtime rule would be a huge economic loss to small business and a professional setback for many of their workers.

The Senate should follow the House’s lead by passing S. 3462, a companion bill to the Walberg bill which delays the overtime rule for six months, buying time for Congress and the American people to prevent the rule from taking effect.

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