Cecily Zamora
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.
| Characteristics | Values |
|---|---|
| Date of the bill | 29 September 2016 |
| Purpose of the bill | To delay Obama's overtime rule |
| Duration of delay | Six months |
| Obama's response | Threatened to veto the bill |
| Obama's reason | Delay and then deny overtime pay to workers |
| Supporters of the bill | Republicans, business groups |
| Opponents of the bill | Senate Democrats, White House |
| Number of eligible workers for overtime pay | 4.2 million |
| Salary threshold | $47,476 a year |
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What You'll Learn
Obama's overtime rule
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 Final Rule was approved by the DOL and submitted to the Office of Management and Budget (OMB) for approval on March 14, 2016. It was to be published in the Federal Register on May 23, 2016, and take effect on December 1, 2016. The rule stated that 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 the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094) on September 29, 2016, which would delay the enforcement of the DOL overtime final rule by six months until June 1, 2017. The White House issued a Statement of Administration Policy, indicating that President Obama would veto the bill if sent to his desk, stating that "while this bill 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 Obama rule extending overtime pay to 4.2 million U.S. workers. The ruling stated that federal law governing overtime does not allow the Labor Department to decide which workers are eligible based on salary levels alone. The Labor Department said it strongly disagreed with the decision and was considering its options.
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Delay approved by the House
On September 29, 2016, the U.S. House approved a measure to delay a new overtime pay rule. The bill would delay the rule for six months. The White House said that President Barack Obama would veto the legislation. In a 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 would delay a rule that would make anyone earning up to $47,476 a year, or roughly $913 a week, eligible for overtime pay. The salary cutoff for overtime pay at the time stood at $23,660 per year. The Department of Labor (DOL) estimated that this change would make 4.2 million currently exempt workers eligible for overtime pay.
The rule was introduced in May 2016, and was set to take effect on December 1, 2016. However, the DOL had proposed to update and revise the regulations issued under the Fair Labor Standards Act (FLSA) implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.
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Opposition by Senate Democrats
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 new rule, issued by the Labor Department, was to take effect on December 1, 2016, and would have doubled to $47,500 the maximum salary a worker could earn and still be eligible for mandatory overtime pay. The salary cutoff for overtime pay stood at $23,660 per year. The new threshold would have been the first significant change in four decades. It was expected to impact almost every sector of the U.S. economy, particularly nonprofit groups, retail companies, hotels, and restaurants, which have many management workers whose salaries are below the new threshold.
However, the House of Representatives approved a measure to delay the new overtime pay rule. The White House said that President Barack Obama would veto legislation delaying the rule. The Republican legislation also faced likely opposition by Senate Democrats, who could block it from advancing in that chamber.
Democrats noted that relatively few people are eligible for overtime pay, given that the salary threshold has only been updated once since the 1970s. "This bill would unnecessarily delay fair pay to millions of workers," said Rep. Bobby Scott (Va.), the top Democrat on the House Education and the Workforce Committee.
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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 FLSA establishes minimum wage, overtime pay, record-keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.
On July 6, 2015, the DOL issued a Notice of Proposed Rulemaking (NPRM) 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. Under the NPRM, the DOL proposed to raise the salary threshold under which white-collar workers and highly compensated employees are exempt from FLSA overtime pay requirements.
The DOL submitted its Final Rule to the Office of Management and Budget (OMB) for approval on March 14, 2016, and it was to be published in the Federal Register on May 23, 2016, with an effective date of December 1, 2016. However, the House of Representatives approved a measure to delay the new overtime pay rule, which President Obama threatened to veto. The bill, known as 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.
In a Statement of Administration Policy, the White House stated that "while this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers." Democrats argued that relatively few people were eligible for overtime pay due to the outdated salary threshold, with only 7% of full-time workers qualifying in 2016 compared to 62% in 1975. They also highlighted the potential impact on millions of workers who would be denied fair pay if the rule was delayed.
Despite President Obama's veto threat, a federal judge delayed the overtime rule in November 2016, and it never went into effect. The ruling stated that the federal law governing overtime does not allow the Labor Department to decide which workers are eligible based on salary levels alone. This decision was influenced by lawsuits filed by states and business groups, claiming that the drastic increase in the salary threshold was arbitrary.
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Litigation and legal challenges
In 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.
On May 23, 2016, the DOL submitted its Final Rule, which would have raised the salary threshold under which white-collar workers and highly compensated employees are exempt from FLSA overtime pay requirements. The rule was scheduled to take effect on December 1, 2016, and would have doubled to $47,500 the maximum salary a worker could earn and still be eligible for mandatory 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. President Obama threatened to veto the bill, stating that "while this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers."
Despite Obama's threat of a veto, a federal judge delayed the overtime rule before it could take effect. Amos Mazzant of the US District Court for the Eastern District of Texas ruled that the federal law governing overtime does not allow the DOL to decide which workers are eligible based on salary levels alone. The ruling was in response to lawsuits filed by states and business groups, who claimed that the drastic increase in the salary threshold was arbitrary. The Labor Department said it strongly disagreed with the decision and considered its options, but the rule was ultimately halted and invalidated.
The Biden administration's attempts to extend overtime pay protections have also faced legal challenges and pushback from business groups and Wall Street. Management-side attorneys have argued that the new rules suffer from the same flaws as the Obama-era rules, which were struck down for going beyond the text of the underlying laws. It remains to be seen whether the Biden administration's rules will face a similar fate in the courts.
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Frequently asked questions
Yes, Obama can veto the delay on overtime law updates.
Obama threatened to veto the bill to delay the overtime rule, which would have delayed the rule for six months, but it is unclear whether he followed through.
The overtime law updates would have doubled to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay. This would have impacted nearly every sector of the U.S. economy, particularly nonprofit groups, retail companies, hotels, and restaurants.
