Kara Sears
On March 13, 2014, President Obama signed a memorandum directing the Department of Labor (DOL) to update the regulations defining which white-collar workers are exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. The DOL proposed to update and revise the regulations issued under the FLSA, implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. The DOL's final rule was scheduled to go into effect on December 1, 2016, but faced opposition from business groups and was delayed by six months by the House of Representatives, which approved the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094). President Obama threatened to veto the bill, stating that the real goal is clear — delay and then deny overtime pay to workers.
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What You'll Learn
Obama's veto threat
On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department of Labor (DOL) to update the regulations defining which white-collar workers are exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. The new rule would have raised the salary threshold under which white-collar workers and highly compensated employees are exempt from FLSA overtime pay requirements. This would have increased the number of workers eligible for overtime pay from 7% to 4.2 million.
In 2016, the House of Representatives approved a six-month delay in the enforcement of the DOL's overtime final rule. The White House issued a Statement of Administration Policy, stating that President Obama would veto the bill if sent to his desk. The statement said:
> While this bill seeks to delay implementation, the real goal is clear — delay and then deny overtime pay to workers.
The bill was expected to pass in the Senate, and it was supported by business groups who claimed that the increase in the salary threshold was arbitrary. However, Obama's veto threat was never carried out, as a federal judge delayed the overtime rule before the bill was sent to his desk.
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House votes to delay
On September 29, 2016, the House of Representatives approved a six-month delay in enforcing the Department of Labor's (DOL) overtime final rule. The vote was 246 to 177 in favor of the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094). This bill would have delayed the DOL's final rule, which was scheduled to go into effect on December 1, 2016, until June 1, 2017.
The White House issued a Statement of Administration Policy strongly opposing H.R. 6094, indicating that President Obama would veto the bill if it reached his desk. In the statement, the White House said:
> "While this bill seeks to delay implementation, the real goal is clear — delay and then deny overtime pay to workers."
The bill faced likely opposition by Senate Democrats, who could have blocked it from advancing further. However, for some Republicans campaigning for re-election, voting for the bill provided an opportunity to showcase their opposition to the rule in their home districts.
The DOL's final rule aimed to update the regulations defining which white-collar workers are exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. Under the new rule, anyone earning up to $47,476 a year, or roughly $913 a week, would be eligible for overtime pay. This was a significant increase from the previous salary cutoff for overtime pay, which stood at $23,660 per year. The DOL estimated that this change would make 4.2 million previously exempt workers eligible for overtime pay.
The attempt to delay the DOL's final rule was supported by business groups, such as the National Federation of Independent Business and the National Council of Chain Restaurants (NCCR). They argued that the Labor Department failed to consider the cost of living differences in communities across the country when setting the new salary threshold.
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The bill's impact
On March 13, 2014, President Obama signed a memorandum directing the Department of Labor (DOL) to update the regulations defining which white-collar workers are exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. The new rule would raise the salary threshold under which white-collar workers and highly compensated employees are exempt from FLSA overtime pay requirements. This would have a significant impact on workers' pay, with an estimated 4.2 million previously exempt workers becoming eligible for overtime pay.
The rule was scheduled to go into effect on December 1, 2016, but faced opposition from business groups and some members of Congress, who argued that the Labor Department did not take into account the cost of living differences in different communities and that the increase in the salary threshold was arbitrary. They also claimed that the rule would create challenges for employers, especially small businesses, and increase costs for businesses.
In response to the delay, the White House issued a Statement of Administration Policy, stating that the bill's "real goal is clear—delay and then deny overtime pay to workers." Democrats noted that relatively few people were eligible for overtime pay, as the salary threshold had only been updated once since the 1970s. They argued that the bill would "unnecessarily delay fair pay to millions of workers."
The impact of the bill would be felt across various sectors of the U.S. economy, with the greatest impact on nonprofit groups, retail companies, hotels, and restaurants, which have many management workers whose salaries are below the new threshold. Some employers may choose to increase salaries to avoid the overtime requirement, while others may reduce annual salaries or convert salaried workers to hourly workers to compensate for the potential overtime costs.
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Opposition to the delay
On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department of Labor (DOL) to update the regulations defining which white-collar workers are exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. The DOL proposed to update and revise the regulations issued under the FLSA, implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees.
The new rule would have raised the salary threshold for overtime pay eligibility from $23,660 per year to $47,476 per year. This change was expected to impact several sectors of the U.S. economy, particularly nonprofit groups, retail companies, hotels, and restaurants, with many management workers falling below the new threshold. The DOL estimated that 4.2 million previously exempt workers would become eligible for overtime pay under the new rule.
However, there was significant opposition to the delay of the overtime law updates. The White House issued a Statement of Administration Policy, stating that President Obama would veto any legislation delaying the implementation of the new rule. The statement argued that the real goal of the delay was "to deny overtime pay to workers." Senate Democrats also opposed the delay and could block it from advancing further.
Additionally, opponents of the delay launched legal challenges, with Texas and 20 other states, along with business groups, filing separate lawsuits claiming that the DOL abused its authority with the drastic increase in the salary threshold. They argued that the Labor Department failed to consider the cost of living differences in different communities and that such a radical change would create extraordinary challenges for employers.
The opposition to the delay in updating the overtime law highlighted the potential impact on workers' rights and fair pay. By vetoing the delay, President Obama aimed to protect the interests of millions of workers who stood to benefit from the updated overtime pay rules.
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The rule's implementation
On March 13, 2014, President Obama signed a memorandum that directed the Department of Labor (DOL) to update the regulations defining which white-collar workers are exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements. The DOL proposed to update and revise the regulations issued under the FLSA, implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees.
The DOL submitted its Final Rule to the Office of Management and Budget (OMB) for approval on March 14, 2016. The Final Rule was published in the Federal Register on May 23, 2016, and was set to take effect on December 1, 2016. Under the new rule, anyone earning up to $47,476 a year, or roughly $913 a week, would be eligible for overtime pay. The salary cutoff for overtime pay previously stood at $23,660 per year. The DOL estimated that this change would make 4.2 million currently exempt workers eligible for overtime pay.
However, the House of Representatives approved a measure to delay the new overtime pay rule. The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094) would have delayed the enforcement of the DOL overtime final rule by six months, until June 1, 2017. The White House issued a Statement of Administration Policy strongly opposing H.R. 6094, indicating that President Obama would veto the bill if it reached his desk. The statement said that while the legislation "seeks to delay implementation, the real goal is clear — delay and then deny overtime pay to workers."
On November 22, 2016, a federal judge blocked the implementation of the new overtime pay rule. Nevada Attorney General Adam Paul Laxalt stated that the ruling "reinforces the importance of the rule of law and constitutional government." The Labor Department said it strongly disagreed with the decision and was considering its options. The Labor Department could have appealed to the 5th U.S. Circuit Court of Appeals, but ultimately, the appeal was dropped after Republican President-elect Donald Trump took office in January 2017.
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Frequently asked questions
Yes, Obama can veto the delay on overtime law updates.
The overtime rule, issued by the Labor Department, was to take effect on Dec 1, 2016, and would have doubled to $47,476 the maximum salary a worker can earn and still be eligible for mandatory overtime pay.
The rule was expected to impact nearly every sector of the US economy, with the greatest impact on nonprofit groups, retail companies, hotels, and restaurants, which have many management workers whose salaries are below the new threshold.
The response to the overtime rule was mixed. While the White House and Labor Department supported it, business groups and some members of Congress opposed it. Some employers also expressed concern about the increased costs of newly nonexempt workers.
A federal judge delayed the implementation of the overtime rule in November 2016, and the rule was ultimately blocked by the Trump administration after Obama's presidency.
