WASHINGTON, D.C. – U.S. Senator Angus King (I-Maine) today announced his support for legislation introduced by Senator Lamar Alexander (R-Tenn.) that would extend the timeline for the implementation of the Obama Administration’s overtime rule to ease compliance on small businesses and non-profits. Senator King followed his co-sponsorship of the legislation today by also sending a letter to President Obama that criticizes the Administration for not doing more to mitigate the detrimental impacts of the rule and requesting that the Administration support the legislation as a responsible path to increase overtime pay without overburdening small businesses and non-profits in Maine and across the country.

“I have previously communicated with your Administration regarding my serious concerns about the Department of Labor’s (DOL) proposal. While I support the goal of raising the wages of all Americans, the approach taken in the final rule will present a substantial hardship to many Maine small businesses, nonprofits, institutions of higher education, and Medicare- or Medicaid-dependent service providers. The new salary threshold of $47,476 may work well in wealthier, densely-populated areas of the country, but the more than 100 percent increase to the new threshold in one step is too dramatic an increase for Maine employers to absorb,” Senator King wrote in his letter.

“Because the final rule does not reflect the realities of many of the rural economies in the United States, this week I cosponsored S. 3464, the Overtime Reform and Review Act, introduced by Senator Lamar Alexander.…While I believe that there are several potential approaches your Administration or Congress could take to moderate the impact of the overtime rule, I have concluded that this legislation sets forth a reasonable approach to providing employers with a more manageable implementation schedule while still ensuring that millions of hardworking Americans are fairly compensated for their time on the job,” Senator King continued. “There are only a few weeks left before the final rule takes effect. As you look to cement your legacy on this issue and to ensure smooth implementation for employers in Maine and across the country, I strongly urge you to offer support for S.3464 or similar legislation that would provide employers with a more realistic timeline to increase salaries for workers and ensure that your goal of raising the overtime threshold is fully realized.”

The legislation cosponsored by Senator King today – the Overtime Reform and Review Act – would stretch out over five years the Administration’s increase in the salary threshold for overtime pay from $23,660 to $47,476, which is now set to more than double at once on December 1. The bill would also require an independent government watchdog study of the rule after the first year of implementation, and if the rule is found to negatively impact American workers and our economy, non-profits – including colleges and universities – along with state and local governments and many Medicaid- and Medicare-eligible facilities such as nursing homes or facilities serving individuals with disabilities would be exempt from any further increases under the rule.

While Senator King supports a reasonable update to the overtime threshold, he has been an outspoken critic of the Obama Administration’s overtime proposal. In April, Senator King sent a letter to President Obama expressing his deep concern that the proposed rule would adversely affect small businesses in rural states like Maine and create unintended consequences that could result in reduced hours and benefits for impacted employees.

Specifically, the Overtime Reform and Review Act would:

• Change the implementation timeline for the administration’s overtime rule – rather than increasing the salary threshold under which employees qualify for overtime pay from $23,660 to $47,476 on December 1, 2016, the bill would instead direct the administration to make increases in four stages over a five-year period to give American workplaces time to adjust to the rule;

• Prohibit an increase to the overtime pay threshold in 2017, giving employers and employees an opportunity to adjust to the new level while an independent government watchdog – the Government Accountability Office (GAO) – studies the impact of the rule on American workers after the first year of implementation;

• Prevent future automatic increases to the overtime threshold. Under the new rule, increases are set to occur automatically every three years starting in 2020; Similar bipartisan legislation introduced in the House of Representatives by Representative Kurt Schrader (D-OR-5) also eliminates the indexing provision.

• Require the Department of Labor and the Small Business Administration Office of Advocacy to work together, using GAO’s independent report, to certify that the 2016 increase under the rule did not increase part-time work, or negatively impact workplace flexibility, workplace benefits, career advancement opportunity, or job growth; Unless these government agencies certify that none of these negative consequences occurred, non-profit organizations—including colleges and universities—as well as state and local governments, and workplaces that receive more than half of their revenue from Medicare or Medicaid payments – such as nursing homes or facilities serving individuals with disabilities – will automatically be exempt from the rule’s remaining increases.

The legislation has been endorsed by the Maine State Chamber of Commerce, the Retail Association of Maine, the Maine Restaurant Association, the Maine Innkeepers Association, the Maine Tourism Association, the Maine Society for Human Resource Management State Council, the Maine Association of Broadcasters, and the Maine Insurance Agents Association.

“The Retail Association of Maine is very happy that Senator King is taking a leadership role in finding a more reasonable middle ground on the new overtime regulations,” said Curtis Picard, Executive Director of the Retail Association of Maine. “His co-sponsorship of Senator Alexander’s bill and his letter to the President are critical to Maine's small businesses and non-profits that are being hit hard by these new regulations that will take effect on December 1. We are hopeful that more Senators follow Senator King's lead in the coming days.”

The Overtime Reform and Review Act was introduced by Senators Lamar Alexander (R-Tenn.), James Lankford (R-Okla.), Tim Scott (R-S.C.), Susan Collins (R-Maine), and Jeff Flake (R-Ariz.) on September 30, 2016. The DOL’s overtime rule is set to take effect on December 1, 2016. Absent congressional or administrative action before December 1, any substantive changes to the overtime rule will need to either go through a multi-month rulemaking process in the next administration or be enacted through legislation that passes in the new Congress.

The complete text of Senator King’s letter to President Obama can be read HERE and is below:

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November 16, 2016

The Honorable Barack Obama

The White House

1600 Pennsylvania Avenue NW

Washington, DC 20500

Dear Mr. President:

I write today regarding the forthcoming implementation of the Department of Labor’s Final Rule Defining and Delimiting the Exemption for Executive, Administrative, and Professional Employees, which is set to take effect on December 1, 2016. In recognizing that the possibility for additional administrative changes to the final rule may be limited, I strongly urge you to support congressional efforts to phase in the new overtime threshold over several years in order to ease implementation for employers and more firmly cement your legacy on this issue.

I have previously communicated with your Administration regarding my serious concerns about the Department of Labor’s (DOL) proposal. While I support the goal of raising the wages of all Americans, the approach taken in the final rule will present a substantial hardship to many Maine small businesses, nonprofits, institutions of higher education, and Medicare- or Medicaid-dependent service providers. The new salary threshold of $47,476 may work well in wealthier, densely-populated areas of the country, but the more than 100 percent increase to the new threshold in one step is too dramatic an increase for Maine employers to absorb.

In a letter dated April 12, 2016, I asked your Administration to consider several ways to alter its draft rule in order to allow for both an increase to the overtime threshold as well as a much less negative impact on employers in more rural and lower-wage areas of the country. In particular, I asked that your Administration consider phasing in the new salary threshold over several years, in the same way that Congress often elects to phase in increases to the minimum wage. I also asked your Administration to rethink the new salary threshold it had proposed and to consider a threshold that more accurately reflects regional economic differences in median household incomes. In addition, I suggested that the rule’s reviewers abandon the proposal to automatically update the overtime threshold in future years through indexing it to inflation or wage growth. Finally, given the complexities associated with implementation of the rule, I requested that your Administration provide businesses with at least one year to come into compliance with the final rule.

Unfortunately, the DOL’s final rule did not meaningfully reflect any of these suggestions. While the final salary threshold was slightly lower than that of the proposed rule, the $47,476 threshold is still too significant an increase for most Maine employers to absorb in one step. The final rule’s inclusion of an automatic update every three years will also present numerous challenges to employers, and the limited timeline for implementation – six months – has meant that many employers in Maine and across the country are ill-prepared to come into compliance with the new rule, particularly during the busy holiday season. 

Because the final rule does not reflect the realities of many of the rural economies in the United States, this week I cosponsored S. 3464, the Overtime Reform and Review Act, introduced by Senator Lamar Alexander. This bill would phase in the new overtime threshold over several years and provide policymakers with additional analysis of the rule’s impact on small businesses, nonprofits, colleges and universities, and service providers dependent upon federal funding. While I believe that there are several potential approaches your Administration or Congress could take to moderate the impact of the overtime rule, I have concluded that this legislation sets forth a reasonable approach to providing employers with a more manageable implementation schedule while still ensuring that millions of hardworking Americans are fairly compensated for their time on the job.

There are only a few weeks left before the final rule takes effect. As you look to cement your legacy on this issue and to ensure smooth implementation for employers in Maine and across the country, I strongly urge you to offer support for S.3464 or similar legislation that would provide employers with a more realistic timeline to increase salaries for workers and ensure that your goal of raising the overtime threshold is fully realized. I also urge you to explore any possible action that your Administration could take in its final weeks in office to ease implementation for employers who are struggling to come into compliance with the new rule.

Americans across the country are eager to see their wages go up, and a reasonable increase to the overtime threshold could help to achieve that goal. In its current form, however, the DOL’s overtime rule will fail to have the impact that has been promised and will create many administrative challenges for employers across the country. I ask that you give serious consideration to this request and consider any legislative or administrative remedy that could facilitate a more reasonable adjustment to the overtime threshold.

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