GOP, Labor Secretary Square Off Over Overtime Rule

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Ben Penn

June 9 — House Republicans and Democrats, joined by Labor Secretary Thomas Perez, expressed opposing opinions on the administration's new overtime rule at a pair of events June 9, as the GOP begins its long-shot challenge of the regulation.

Republican lawmakers speaking at a House Education and the Workforce Committee hearing emphasized the rule's damaging effects on universities and nonprofits and its hindrance to employee flexibility.

“The department ignored the voices of those who must implement this rule in their workplaces, on their campuses and as they serve the needs of people in their communities,” committee Chairman John Kline (R-Minn.) said.

Those are the arguments Republicans will use in the coming weeks when they attempt to block the rule in both chambers of Congress through several legislative mechanisms, despite a certain veto threat.

The regulation (RIN:1235-AA11) released in May doubles the annual salary threshold for overtime exemption to about $47,500, effective Dec. 1 (95 DLR AA-1, 5/17/16).

At a news conference before the committee hearing, Perez called out Republicans for trying to hide the rule's benefits in the fast-food and retail sectors, where countless mid-level managers will become newly eligible for overtime wages.

“What's notable about today's hearing is not who the witnesses are, but who the witnesses aren’t,” the labor secretary said. “There's nobody here from the majority from fast food, from retailers to come and testify, because they know that they don’t have a leg to stand on.”

Republicans Highlight Nonprofits, Higher Ed

The majority party picked witnesses representing the nonprofit Easter Seals New Hampshire, the University of Kansas and a wage-and-hour attorney from management-side law firm Seyfarth Shaw LLP.

A spokeswoman for the committee Republicans, in response to Perez's remarks, told Bloomberg BNA that the hearing's purpose was to shine a light on the types of employers whose concerns have been ignored by the DOL—nonprofits, small businesses and colleges and universities.

“Why are Secretary Perez and congressional Democrats so afraid to have these voices heard?” the spokeswoman said in a June 9 e-mail.

The labor secretary, foreseeing those arguments, was joined at the podium by university postdoctoral candidates, who said they want higher wages, and a nonprofit leader who spoke to the value of paying his employees overtime.

“There are literally thousands of nonprofits in this country whose mission is to lift wages and they understand” that also means lifting their own workers' wages, Perez said.

Hearing Sets Stage for Legislative Challenges

The hearing comes as Sen. James Lankford (R-Okla.) said June 9 he will offer an amendment to the DOL funding bill to stop the overtime rule (see related story), while two days earlier Senate Republicans introduced a disapproval resolution under the Congressional Review Act to try to at least slow the rule's implementation (109 DLR A-11, 6/7/16).

GOP lawmakers in both chambers also are working behind the scenes to build support (91 DLR A-9, 5/11/16) for a bill they introduced in March that would require the DOL to conduct further economic analysis before the regulation can take effect (52 DLR A-1, 3/17/16).

The rule's critics have argued that it will not have the economic benefits touted by the administration and that employers don't have budget flexibility to pay time-and-a-half for hours worked beyond 40 in a week and may be forced to cut jobs.

President Barack Obama hasn't yet issued a veto threat but has strongly supported the rule, calling it “the single biggest step I can take through executive action to raise wages for the American people.” He directed the department in 2014 to update the salary threshold.

Business lobbyists are pushing for any form of legislation that can successfully roll back the overtime regulation.

“We continue to pursue all avenues” of challenges, Lisa Horn, director of congressional affairs at the Society for Human Resource Management, told Bloomberg BNA after the hearing.

“The more that lawmakers on both sides of the aisle are hearing about this back home—from their constituents, from the nonprofits, from higher ed, from small businesses—they're going to want to take action to seek some relief,” she said.

Horn is also spokeswoman for the Partnership to Protect Workplace Opportunity, a coalition of employer trade associations that opposes the rule.

Employee Flexibility a Top Concern

At the House hearing, members were more focused on framing their arguments for or against the regulation than they were on discussing legislation to thwart it.

Rep. Tim Walberg (R-Mich.), who chairs the Subcommittee on Workforce Protections, characterized the regulation as a career advancement killer for workers converted to hourly status when they're reclassified as nonexempt from overtime pay.

The rule also fails to factor in the realities of the modern workplace, such as workers' ability to check into the office remotely, he said.

Alex Passantino, a partner at Seyfarth Shaw in Washington, testified that employers may be forced to limit the use of mobile technology by workers to avoid overtime pay liability.

This is an issue on the radar of the DOL's Wage and Hour Division, which plans soon to solicit information from stakeholders on the topic (106 DLR C-1, 6/2/16).

“Unfortunately employers don't have the luxury of waiting for the department to adjust to the modern scheme,” as they must comply with the rule by December, said Passantino, who was acting WHD administrator during the George W. Bush administration.

The sole witness allowed for Democrats on the committee, Jared Bernstein, a former economic adviser to Vice President Joe Biden, said the Republicans' rhetoric on the rule's burdens is misleading.

The share of workers whose salaries fall under the old threshold of $23,660 and the new one of $47,476 “who usually work overtime is consistently below 1 percent,” said Bernstein, now a senior fellow at the Center on Budget and Policy Priorities. “The share of payroll that needs to be increased to meet the threshold is below one-tenth of 1 percent.”

To contact the reporter on this story: Ben Penn in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Request Labor & Employment on Bloomberg Law