Politics

Here’s Why Obama’s Upcoming Overtime Rule Faces Fierce Opposition

REUTERS/Carlos Barria.

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A coalition of conservative groups wrote a letter to lawmakers Tuesday urging them to reject an upcoming overtime rule by supporting legislation that would require it to be completely reworked.

The Department of Labor (DOL) is expected to release the final version of the overtime rule this week. Critics warn it threatens the very workers it’s meant to help if the rule is unchanged from its drafted version, released in June 2015. The coalition urged Congress to support pending legislation that would require the rule to be completely redone to avoid its current flaws.

Managers and administrators under current law do not qualify for overtime if they make $23,660 annually. The new rule is expected to raise the exemption threshold to around $50,000 annually. The Competitive Enterprise Institute, Americans for Prosperity, Center for Worker Freedom and FreedomWorks among several other organizations signed the letter.

“The legislation requires the U.S. Secretary of Labor to conduct a thorough economic analysis on how updating overtime rules would affect small businesses and take into consideration cost-of-living differences,” the coalition letter stated. “The undersigned groups believe workers should receive fair pay for a day’s work, but the overtime rule as proposed is a poor vehicle to do so.”

“Industries and organizations across the country—from universities to community care providers—would face drastic increases in labor costs as a result of the Obama administration’s new interpretation,” the letter continued. “By increasing the threshold, many workers will lose salaried employment status and the benefits they depend on, like flexible work arrangements and health benefits.”

Republicans Sen. [crscore]Tim Scott[/crscore] and Rep. [crscore]Tim Walberg[/crscore] introduced the opposition legislation Mar. 17 over concerns the rule change could hurt the very workers it’s meant to help. Their legislation would require the department to conduct a thorough economic analysis before releasing a final version of the rule.

“Most concerning, the DOL’s methodology used to analyze overtime costs is unknown,” the letter stated. “The Obama administration denied the Florida Department of Economic Opportunity’s (FDEO) request to check the methodology used to anticipate the costs. The FDEO performed its own analysis. It found that in Florida alone, the costs would be $1.7 billion.”

The letter added that an analysis by the department claimed the rule would only cost $1.8 billion nationwide. President Barack Obama signed a memo March 2014 compelling his administration to expand overtime privileges to more workers. The final version of the rule is not expected to be much different than the drafted proposal.

The White House has argued the change is fair to workers and is a much needed update. Labor unions have also praised the proposed change. The AFL-CIO noted in a September 2015 letter to the administration that overtime protections have dwindled over the years and the revision could help restore fairness in the workplace.

The Fair Labor Standards Act of 1938 originally established overtime protections, among other rules like the minimum wage. The overtime exemption threshold has been increased on numerous occasions to keep pace with inflation but never at such a drastic rate.

The department said it is not commenting until the new rule is officially released.

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