The Workforce Protections Subcommittee of the House Education and the Workforce Committee held a hearing to examine the proposed FLSA overtime rule for executive, administrative, and professional employees. In response to a lawsuit, the National Labor Relations Board (NLRB) has delayed the effective date of its joint employer rule for two months until February 26, 2024. The Senate Committee on Health, Education, Labor, and Pensions held a hearing to discuss the resurgence of labor.
Hearing Held on DOL Proposed Overtime Rule – The Workforce Protections Subcommittee of the House Education and the Workforce Committee held a hearing titled “Bad for Business: DOL’s Proposed Overtime Rule.” The proposed rule would raise the salary basis threshold for employees who are considered exempt executive, administrative and professional employees under the Fair Labor Standards Act (FLSA) from $35,568/year to $55,068/year. The total annual compensation requirement for highly compensated employees would increase from $107,432/year to $143,988/year. The salary basis threshold would be automatically increased every three years. The public comment period ended on November 7th and there were 26,281 comments submitted on the proposed rule.
In calling for the withdrawal of the proposed rule, Representative Kevin Kiley (R-CA) who chairs the Workforce Protections Subcommittee stated, “The administration’s proposed rule poses a threat to the livelihoods of the very people that the administration claims it wants to help. The overtime rule is expected to impact an estimated 3.6 million working Americans and cost employers an estimated $1.3 billion, sticking them between a rock and a hard place. If employers cannot afford the new mandate, many will be forced to lay off their employees.”
Among those testifying in opposition to the proposed rule was Paul DeCamp with the law firm of Epstein, Becker, & Green who is a former Wage and Hour Administrator with the Department of Labor. Among the reasons he cited for his concern with the proposed rule were: 1) the proposed salary level and the methodology used to determine it would “fundamentally transform the role and function of the salary threshold into a regulatory device unprecedented in the 85-year history of the FLSA, displacing the duties test as the main determinant of exempt status”, 2) the proposed increase is much larger than previous increases given that the last increase was implemented less than four years ago, 3) the automatic proposed increase every three years would violate the notice and comment requirement under the Administrative Procedure Act, and 4) these types of changes should be done through legislation enacted by Congress and not through rulemaking by the Department of Labor.
Testifying in support of the proposed rule was Judith Conti, Government Affairs Director, National Employment Law Project. She stated that raising the salary basis threshold as the rule proposes would give additional protection for those employees who are working more than 40 hours per week without receiving additional compensation. She noted that employers would have the option of “paying those workers more, managing their time more efficiently, or by hiring additional workers, which bolsters workers’ lives and communities, and fuels economic growth.” Also, by including automatic adjustments to the salary basis threshold, the proposed rule would ensure that the overtime protections keep up with current economic conditions.
NLRB Delays Effective Date of Joint Employer Rule – In response to a lawsuit filed challenging the new joint employer rule, the National Labor Relations Board (NLRB) has delayed the effective date of the rule from December 26, 2023, until February 26, 2024. According to the NLRB, this will allow time for the resolution of a lawsuit that has been filed challenging the new rule.
A group of twelve business organizations led by the Chamber of Commerce filed the lawsuit on November 9th in the United States District Court for the Eastern District of Texas challenging the new joint employer rule. Several days later, a motion for summary judgment was filed by the plaintiffs in the case. The plaintiffs in the case of Chamber of Commerce of the United States v. National Labor Relations Board allege that the new joint employer rule is unlawful and violates the Administrative Procedure Act. According to the Chamber of Commerce, “The most significant aspect of the new rule is that an entity may be found to be a joint employer controlling the essential terms and conditions of employment whether or not such control is ever exercised and without regard to whether any such exercise of control is direct or indirect.”
In addition, the Chamber of Commerce noted that the rule’s requirement that an employer be classified as a joint employer whenever it has authority to control a single essential term of employment whether the authority is ever exercised is not permissible. The Chamber of Commerce stated that the rule also blurs the distinction between employees and independent contractors by enforcing employee status when indirect control exists, thus requiring the NLRB to consider terms and conditions that would usually be indicative of independent contractor rather than joint employer status.
Senate Committee Holds Hearing on the Resurgence of Labor – The Senate Committee on Health, Education, Labor, and Pensions (HELP) held a hearing on the resurgence of labor unions and how they are improving the lives of working families. Senator Bernie Sanders (I-VT) who chairs the HELP Committee noted that during this year, over 450,000 workers have gone on strike – a 900% increase compared to 2 years ago. He advised that union membership increased last year by 273,000, employees in almost 2,600 worksites filed petitions with the National Labor Relations Board to form a union, and according to Gallup, 67% of Americans support labor unions. He stated that “more workers want to join unions; more workers are joining unions; and more workers are going out on strike to improve their working conditions than we have seen in a very long time – and many of those unions are winning strong contracts for their workers.”
Among the witnesses at the hearing were several union presidents including Sean O’Brien, General President, International Brotherhood of Teamsters, Shawn Fain, International President, United Auto Workers Union, Sara Nelson, International President, Association of Flight Attendants – Communications Workers of America. Also testifying at the hearing were Diane Furchtgott-Rother, Director, Center for Energy, Climate, and Environment, The Heritage Foundation and Sean Higgins, Research Fellow, Competitive Enterprise Institute.
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.