May 22, 2019

Rep. Takano and Chairwoman Adams Lead 75 House Democrats in Opposing Department of Labor’s Proposed Overtime Rule

Washington, D.C. – Rep. Mark Takano (D-Calif.) and Chairwoman of the Subcommittee on Workforce Protections, Rep. Alma Adams (D-NC), led 75 of their colleagues in sending a letter to Department of Labor Secretary Alexander Acosta expressing opposition to the Department’s proposed overtime rule and urging the withdrawal of this rule, which would fail to strengthen protections for millions of American workers. 

In the letter, Members write, “The Department’s proposed salary threshold of $35,308 per year ($679 per week) is an unsatisfactory attempt to update the salary threshold for an overtime rule that would impact millions of America’s workers.”

They continued, “Estimates from your Department show that 2.8 million fewer people will be eligible for overtime pay under this rule in the first year, compared to the 2016 final rule. However, this number still fails to take into consideration the additional workers that would have received eligibility under the 2016 rule. Estimates have shown that close to 8.2 million workers will not be eligible for overtime protections under this proposal compared to the 2016 rule. The proposed lower salary threshold increases the number of salaried workers that will not receive increased pay, resulting in about $1.2 billion in lost wages over 10 years. Additionally, we are deeply concerned that the proposal does not include an automatic update of the salary threshold that indexes for inflation.”

The proposed rule, which was released in March, would set the salary threshold under which workers are entitled to receive overtime pay at $35,308 per year. This proposal would exclude millions of workers who would have benefited under the 2016 Obama Administration rule, which would have increased the threshold to nearly $50,000. 

The letter can be found here and below:

May 21, 2019

 

The Honorable R. Alexander Acosta

Secretary

U.S. Department of Labor

200 Constitutional Ave, N.W.

Washington, D.C. 20210

Re: RIN 1235-AA20 

Dear Secretary Acosta:

As members of Congress, we write to express our strong opposition to the U.S. Department of Labor’s Notice of Proposed Rulemaking (NPRM) on Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (EAP), published on March 22, 2019[1]. The NPRM does not go far enough to protect the millions of American workers that deserve protections under the overtime standards of the Fair Labor Standards Act (FLSA).

The FLSA requires salaried workers earning below a certain income threshold to be eligible for time and a half pay for the extra hours that they work over the 40-hour work week. Overtime standards are intended to prevent workers with limited bargaining power from being forced to work excessive hours without being properly compensated. It is another set of basic protections under the FLSA that ensures workers are protected from difficult working conditions. Additionally, the standards incentive employers to hire additional staff to stop overworking employees.   

The Department’s proposed salary threshold of $35,308 per year ($679 per week) is an unsatisfactory attempt to update the salary threshold for an overtime rule that would impact millions of America’s workers. Under the Obama Administration, the Department of Labor proposed raising the threshold to $47,476. Unfortunately, a Texas federal court invalidated that rule in 2017. Instead of defending the 2016 rule in court, your Department has chosen to issue a proposed rule that falls drastically short of ensuring overtime protections for workers. The salary threshold under the 2016 rule was a moderate adjustment. If the 1975 salary threshold had been updated for inflation, it would be nearly $58,000 in 2020. While we appreciate the Department’s attempt to increase the threshold from the current 2004 level of $23,660, it is insufficient and does not make up for the lost inflation. We also have concerns with the U.S. territory salary level of $455 per week and the methodology used to determine the amount. 

This NPRM does not make any changes to the duties test used to determine if an employee qualifies as a white-collar exemption. Instead, the purpose is to update the salary threshold, similar to the purpose of the 2016 rule. We do not agree with the methodology that uses the 20^th percentile of earnings for full time salaried workers from the lowest Census wage region, similar to the 2004 rule. The Texas court invalidated the 2016 rule because it found that the salary level pegged to the 40^th percentile was too high. In determining a new salary threshold, the Department should have chosen a level that was much higher than the 20^th percentile to keep pace with where the salary level should be today.

Estimates from your Department show that 2.8 million fewer people will be eligible for overtime pay under this rule in the first year, compared to the 2016 final rule.[2] However, this number still fails to take into consideration the additional workers that would have received eligibility under the 2016 rule. Estimates have shown that close to 8.2 million workers will not be eligible for overtime protections under this proposal compared to the 2016 rule.[3] The proposed lower salary threshold increases the number of salaried workers that will not receive increased pay, resulting in about $1.2 billion in lost wages over 10 years.

Additionally, we are deeply concerned that the proposal does not include an automatic update of the salary threshold that indexes for inflation. The 2016 final rule included an automatic update of the salary level every three years. Without an automatic indexing of the salary threshold, the NPRM will fail to protect nearly 11.5 million people within the first ten years. Unfortunately, the salary threshold has not been updated to keep pace with inflation or the changing economy. In 1975, over 60 percent of salaried workers qualified for overtime protections. Today, only 7 percent qualify under the current threshold.  The 2004 final rule stated, “The Department intends in the future to update the salary levels on a more regular basis, as it did prior to 1975, and believes that a 29-year delay is unlikely to reoccur.”[4] It has now been 15 years without an update to the salary level. In the NPRM, the Department states that it will be “affirming its intention to propose increasing the earnings thresholds every four years.”[5] A new salary threshold has only been updated and gone into effect once since 1975. American workers deserve assurance from the Department that their labor and overtime protections will be guaranteed, not another 15 years of failed intentions and promises.

We urge the Department to withdraw this proposed rule as it would be detrimental and fail to strengthen protections for millions of American workers. Instead, the Department should implement the 2016 finalized rule as it goes further to ensure income equity and workforce protections for workers.

Press Contact

Dayanara Ramirez (202) 225-2305

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