HOW OPPONENTS COULD STOP THE NEW OVERTIME RULE: CONGRESSIONAL REVIEW PART DEUX

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While the Obama Administration continues its rollout tour for the new overtime rule, opponents in Congress and in the business community are already getting in shape for what’s likely to be a knock-down, drag-out fight over what could amount to a pay hike for up to 5 million workers in the first year. 

We’ve been down this road on labor issues before, but this time calendar considerations and interesting drafting decisions give lawmakers and others at least a fighting chance at stopping the rule before the first new overtime check is cashed. Yet again, Republicans are likely to consider dusting off the Congressional Review Act for another lap around the Capitol. Here’s how it could actually work this time.

The name of the game is “delay.” With about 17 months remaining in the Obama presidency, the hope for opponents is that they can push the rule’s implementation back and run out the clock on the administration. 

Instead of challenging the crux of the rule change—which raises the salary cap on overtime eligibility under the Fair Labor Standards Act to $50,440 from $23,660—opponents are more likely to focus on the nuts and bolts of the rulemaking process. The idea is to push that process so far back that it’s left to whoever moves into the White House next to decide whether to move forward or scrap the rule altogether. 

The Congressional Review Act allows lawmakers to challenge an agency regulation that they don’t like by passing a joint resolution of disapproval. That’s exactly what they did last March, passing a resolution against new National Labor Relations Board rules on union representation elections. The move proved largely symbolic--Obama vetoed the resolution later the same month.

Major Impact

The difference here is that the overtime rule is probably going to be deemed a “major rule.” If Congress passes a resolution to block a major rule, it automatically stops the rule from taking effect for 60 days. Major rules are those that result in an annual effect on the economy of $100 million or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based companies to compete with foreign-based companies in domestic and export markets. 

Given the number of workers expected to be affected—the White House says nearly 5 million in the first year—and the increase in wages that many of them could see, it’s likely the overtime changes will be considered “major.”

The CRA delay would be most effective if it comes with a legal challenge to stop or slow the rule from taking effect. Business community folks told Bloomberg BNA the day the proposed rule was issued that the Labor Department may have opened itself up to just such a challenge by putting off a decision about what to do with the “duties test” used to determine whether a worker who makes more than the minimum salary threshold should be exempt from the overtime requirement. The employee must have duties that are managerial or supervisory or require advanced knowledge in order to be exempt.

The DOL asked for public comments on the issue, saying it hopes raising the salary threshold will reduce the number of workers for whom the duties test applies. But it also hinted that it might consider tweaking the rule to require that workers spend at least 50 percent of their time on managerial-type tasks in order to qualify for the exemption. 

Such a change would raise a number of legal questions related to the rulemaking process. That includes whether the DOL should have to restart the process or issue a separate rule on the duties test alone. 

While the courts sort those questions out, the clock will be ticking.

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