Restoring Overtime Pay Act of 2019

II 116TH CONGRESS 1ST SESSION S. 1786 To amend the Fair Labor Standards Act of 1938 to establish a minimum salary threshold for bona fide executive, administrative, and professional employees exempt from Federal overtime compensation requirements, and automatically update such threshold every 3 years. IN THE SENATE OF THE UNITED STATES JUNE 11, 2019 Mr. BROWN (for himself, Mrs. MURRAY, Mr. VAN HOLLEN, Ms. BALDWIN, Mr. DURBIN, Ms. WARREN, Mr. MARKEY, Mr. SANDERS, Mrs. GILLI- BRAND, Mr. WHITEHOUSE, Ms. KLOBUCHAR, Ms. HARRIS, Mr. SCHATZ, Mr. CARDIN, Mr. WYDEN, Mr. MERKLEY, Ms. CANTWELL, Mr. BLUMENTHAL, Mr. BOOKER, Ms. DUCKWORTH, and Mr. CASEY) intro- duced the following bill; which was read twice and referred to the Com- mittee on Health, Education, Labor, and Pensions A BILL To amend the Fair Labor Standards Act of 1938 to establish a minimum salary threshold for bona fide executive, ad- ministrative, and professional employees exempt from Federal overtime compensation requirements, and auto- matically update such threshold every 3 years. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Restoring Overtime 4 Pay Act of 2019’’. 5 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 2 •S 1786 IS SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) The Fair Labor Standards Act of 1938 (29 3 U.S.C. 201 et seq.) established overtime compensa- 4 tion requirements for certain employees when they 5 work more than 40 hours in a given workweek. 6 (2) Under section 13(a)(1) of such Act, Con- 7 gress delegated to the Secretary of Labor the au- 8 thority to define and delimit the terms relating to 9 the exemption for bona fide executive, administra- 10 tive, and professional employees (commonly known 11 as the ‘‘white collar exemption’’). 12 (3) For more than 75 years, the Secretary of 13 Labor has exercised its delegated authority to issue 14 regulations that define and delimit the terms relat- 15 ing to the white collar exemption by applying a du- 16 ties test and applying a minimum compensation level 17 (or salary threshold). 18 (4) The Secretary of Labor began utilizing a 19 salary threshold in the initial regulations defining 20 and delimiting the terms relating to the white collar 21 exemption, which were first issued in 1938. 22 (5) Congress has long approved the use of a 23 salary threshold by the Secretary of Labor, as dem- 24 onstrated by the fact that Congress has amended the 25 Fair Labor Standards Act of 1938 at least 10 times 26 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 3 •S 1786 IS since 1938 and has not precluded the Secretary 1 from using a salary threshold. 2 (6) The salary threshold became woefully out of 3 date and ineffective as a result of not being suffi- 4 ciently updated to keep pace with a changing econ- 5 omy, as evidenced by the fact that more than 60 6 percent of all full-time salaried workers earned less 7 than the salary threshold in 1975 and less than 7 8 percent of these workers earned less than the salary 9 threshold in 2016. 10 (7) The salary threshold of $455 per week, or 11 $23,660 per year, that was in effect on May 22, 12 2016, was below the poverty line for a family of 4. 13 (8) The Secretary of Labor updated the salary 14 threshold on May 23, 2016, through a final rule en- 15 titled ‘‘Defining and Delimiting the Exemptions for 16 Executive, Administrative, Professional, Outside 17 Sales and Computer Employees’’ (81 Fed. Reg. 18 32391) by increasing the salary threshold to the 19 40th percentile of earnings of full-time salaried em- 20 ployees in the lowest-wage census region, resulting 21 in a salary threshold of $913 per week or $47,476 22 per year. 23 (9) The final rule would benefit more than 24 13,000,000 employees by providing overtime com- 25 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 4 •S 1786 IS pensation protections to 4,200,000 new employees 1 and strengthening overtime compensation protec- 2 tions for 8,900,000 additional employees. 3 (10) The Secretary of Labor went through a 4 thorough process in crafting the final rule, seeking 5 public input and conducting extensive economic anal- 6 ysis, including— 7 (A) spending more than a year meeting 8 with more than 200 interested parties to obtain 9 input before issuing the proposed rule in 2015; 10 (B) considering more than 270,000 com- 11 ments received during the 60-day public com- 12 ment period on the proposed rule; and 13 (C) making significant changes in response 14 to public input before issuing the final rule. 15 (11) The public comments submitted to the 16 Secretary of Labor regarding the proposed rule were 17 overwhelmingly positive and supportive of the rule. 18 (12) The increase in the salary threshold, in- 19 cluded in the final rule, to the 40th percentile of 20 earnings of full-time salaried employees in the low- 21 est-wage census region, resulting in a threshold of 22 $913 per week or $47,476 per year, was a strong 23 yet measured increase by almost any measure, in- 24 cluding as compared to— 25 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 5 •S 1786 IS (A) the higher salary threshold of $970 per 1 week or $50,440 per year, initially put forward 2 by the Secretary of Labor in the proposed rule; 3 (B) the salary threshold of $984 per week 4 or $51,168 per year, which would have fully ac- 5 counted for the erosion to the value of the sal- 6 ary threshold since 1975 due to inflation; 7 (C) the salary threshold of $1,122 per 8 week or $58,344 per year, which would have 9 covered the same share of all salaried workers 10 as were covered in 1975 after accounting for 11 changes in the economy; and 12 (D) the salary threshold of $1,327 per 13 week or $69,004 per year, which would have 14 covered the same percentage of all salaried 15 workers as were covered in 1975 without ac- 16 counting for changes in the economy. 17 (13) The United States District Court for the 18 Eastern District of Texas erroneously called the au- 19 thority of the Secretary of Labor under the Fair 20 Labor Standards Act of 1938 into question when it 21 issued a preliminary injunction enjoining the De- 22 partment of Labor from enforcing the final overtime 23 rule. 24 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 6 •S 1786 IS (14) The United States District Court for the 1 Eastern District of Texas issued a final decision in- 2 validating the rule, threatening overtime protections 3 for millions of workers. 4 (15) On March 7, 2019, the Secretary of Labor 5 proposed to update the salary threshold to $35,308, 6 which would deny overtime pay eligibility to approxi- 7 mately 3,000,000 workers who would otherwise ben- 8 efit from the higher salary threshold in the 2016 9 final rule. 10 SEC. 3. MINIMUM SALARY THRESHOLD FOR BONA FIDE EX- 11 ECUTIVE, ADMINISTRATIVE, AND PROFES- 12 SIONAL EMPLOYEES EXEMPT FROM FEDERAL 13 OVERTIME COMPENSATION REQUIREMENTS. 14 (a) IN GENERAL.—Section 13 of the Fair Labor 15 Standards Act of 1938 (29 U.S.C. 213) is amended— 16 (1) in subsection (a)(1)— 17 (A) by inserting ‘‘subsection (k) and’’ after 18 ‘‘subject to’’; and 19 (B) by inserting ‘‘(except as provided 20 under subsection (k)(2)(C))’’ after ‘‘Administra- 21 tive Procedure Act’’; and 22 (2) by adding at the end the following: 23 ‘‘(k) MINIMUM SALARY THRESHOLD.— 24 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 7 •S 1786 IS ‘‘(1) IN GENERAL.—Beginning on the effective 1 date of the Restoring Overtime Pay Act of 2019, the 2 Secretary shall require that an employee described in 3 subsection (a)(1), as a requirement for exemption 4 under such subsection, be compensated on a salary 5 basis, or equivalent fee basis, within the meaning of 6 such terms in subpart G of part 541 of title 29, 7 Code of Federal Regulations (or any successor regu- 8 lation), at a rate per week that is not less than the 9 salary threshold under paragraph (2). 10 ‘‘(2) SALARY THRESHOLD.— 11 ‘‘(A) IN GENERAL.—Subject to subpara- 12 graphs (B) and (C), the salary threshold shall 13 be an amount that is equal to the 40th per- 14 centile of earnings of full-time salaried workers 15 in the lowest-wage census region, as determined 16 by the Bureau of Labor Statistics based on 17 data from the second quarter of the calendar 18 year preceding the calendar year in which such 19 amount takes effect. 20 ‘‘(B) INCREASED THRESHOLD.—The Sec- 21 retary may establish, through notice and com- 22 ment rulemaking under section 553 of title 5, 23 United States Code, a salary threshold that is 24 an amount that— 25 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 8 •S 1786 IS ‘‘(i) is greater than the 40th per- 1 centile of earnings of the full-time salaried 2 workers described in subparagraph (A); 3 and 4 ‘‘(ii) is calculated based on a data set 5 and methodology established by the Sec- 6 retary that are capable of being updated in 7 accordance with subparagraph (C). 8 ‘‘(C) AUTOMATIC UPDATES.— 9 ‘‘(i) IN GENERAL.—Not later than 3 10 years after the salary threshold first takes 11 effect under subparagraph (A), and every 12 3 years thereafter, or, in the case in which 13 the Secretary establishes an increased sal- 14 ary threshold under subparagraph (B), 15 every 3 years after establishing such in- 16 creased salary threshold, the Secretary 17 shall update the amount of the salary 18 threshold in effect under subparagraph (A) 19 or (B), as applicable, so that such amount 20 is equal to— 21 ‘‘(I) in the case in which the Sec- 22 retary does not establish an increased 23 salary threshold under subparagraph 24 (B), the 40th percentile of earnings of 25 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 9 •S 1786 IS full-time salaried workers in the low- 1 est-wage census region, as determined 2 by the Bureau of Labor Statistics 3 based on data from the second quar- 4 ter of the calendar year preceding the 5 calendar year in which such updated 6 amount is to take effect; and 7 ‘‘(II) in the case in which the 8 Secretary establishes an increased sal- 9 ary threshold under subparagraph 10 (B), the greater of— 11 ‘‘(aa) the 40th percentile de- 12 scribed in subclause (I); and 13 ‘‘(bb) the increased salary 14 threshold established under sub- 15 paragraph (B), as updated in ac- 16 cordance with the data set and 17 methodology established by the 18 Secretary under subparagraph 19 (B)(ii). 20 ‘‘(ii) NONAPPLICABILITY OF RULE- 21 MAKING.—Any update described in this 22 subparagraph shall not be subject to the 23 requirements of notice and comment rule- 24 VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS 10 •S 1786 IS making under section 553 of title 5, 1 United States Code. 2 ‘‘(D) NOTICE REQUIREMENT.—Not later 3 than 60 days before a revised salary threshold 4 under this paragraph takes effect, the Secretary 5 shall publish a notice announcing the amount in 6 the Federal Register and on the internet 7 website of the Department of Labor. 8 ‘‘(3) DUTIES TEST.—The Secretary shall, in 9 addition to the requirement under paragraph (1), 10 continue to require employees to satisfy a duties 11 test, as prescribed by the Secretary, in defining and 12 delimiting the terms described in subsection (a)(1).’’. 13 (b) PUBLICATION OF EARNINGS.—Not later than 21 14 days after the end of each calendar quarter, the Bureau 15 of Labor Statistics shall publish on its public website, for 16 each week of such quarter, data on the weekly earnings 17 of nonhourly, full-time salaried workers by census region 18 (as designated by the Bureau of the Census). 19 (c) EFFECTIVE DATE.—This Act, and the amend- 20 ments made by this Act, shall take effect on the first day 21 of the third month that begins after the date of enactment 22 of this Act. 23 Æ VerDate Sep 11 2014 06:27 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S1786.IS S1786 kjohnson on DSK79L0C42 with BILLS