Restoring Overtime Pay Act of 2023

I 118TH CONGRESS 1ST SESSION H. R. 2395 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 each year, and for other pur- poses. IN THE HOUSE OF REPRESENTATIVES MARCH 29, 2023 Mr. TAKANO (for himself and Ms. ADAMS) introduced the following bill; which was referred to the Committee on Education and the Workforce 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 each year, and for other purposes. 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 2023’’. 5 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 2395 IH SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) The Fair Labor Standards Act of 1938 (29 3 U.S.C. 201 et seq.) established overtime compensa- 4 tion requirements for certain employees when they 5 work more than 40 hours in a given workweek. 6 (2) Under section 13(a)(1) of such Act, Con- 7 gress delegated to the Secretary of Labor the au- 8 thority to define and delimit the terms relating to 9 the exemption for bona fide executive, administra- 10 tive, and professional employees (commonly known 11 as the ‘‘white-collar exemption’’). 12 (3) For more than 75 years, the Secretary of 13 Labor has exercised the Secretary’s delegated au- 14 thority to issue regulations that define and delimit 15 the terms relating to the white-collar exemption by 16 applying a duties test and applying a minimum com- 17 pensation level (or salary threshold). 18 (4) The Secretary of Labor began utilizing a 19 salary threshold in the initial regulations defining 20 and delimiting the terms relating to the white-collar 21 exemption, which were first issued in 1938. 22 (5) Congress has long approved the use of a 23 salary threshold by the Secretary of Labor, as dem- 24 onstrated by the fact that Congress has amended the 25 Fair Labor Standards Act of 1938 at least 10 times 26 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 2395 IH 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 the changing econ- 5 omy, as evidenced by the fact that 63 percent of all 6 full-time salaried workers were guaranteed overtime 7 pay under section 7 of the Fair Labor Standards 8 Act of 1938 based on their salaries in 1975 while, 9 in 2022, less than 15 percent of all full-time salaried 10 workers are guaranteed such overtime pay under the 11 overtime rule promulgated on September 27, 2019. 12 (7) Weak overtime protections also hurt the 13 many workers who are forced into part-time jobs but 14 need full-time jobs to support themselves and their 15 families. When employers can no longer overwork 16 employees who are exempt from overtime pay be- 17 cause of lax standards, they will be forced to spread 18 work and hours across their workforce. Restoring 19 overtime protections is especially important in 2023, 20 as the economy of the United States is still recov- 21 ering from the pandemic and many workers report 22 their employers demanding excessive hours. 23 (8) In 2015, when the Department of Labor 24 proposed an increase to the overtime salary thresh- 25 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 2395 IH old rule under the Obama Administration, it found 1 that the historic range of the overtime salary thresh- 2 old under the Fair Labor Standards Act of 1938 ran 3 from approximately the 35th to the 55th percentile 4 of weekly earnings for all full-time salaried workers. 5 By phasing the overtime salary threshold back up to 6 the 55th percentile of earnings of full-time salaried 7 workers nationally—which after adjusting for infla- 8 tion is projected to translate to an annualized 9 amount of $73,551 in 2021 and $82,745 by 2026 10 (roughly the level of the boldest State overtime 11 threshold increase)—the United States can restore 12 overtime protections to historic levels. 13 SEC. 3. MINIMUM SALARY THRESHOLD FOR BONA FIDE EX- 14 ECUTIVE, ADMINISTRATIVE, AND PROFES- 15 SIONAL EMPLOYEES EXEMPT FROM FEDERAL 16 OVERTIME COMPENSATION REQUIREMENTS. 17 (a) IN GENERAL.—Section 13 of the Fair Labor 18 Standards Act of 1938 (29 U.S.C. 213) is amended— 19 (1) in subsection (a)(1)— 20 (A) by inserting ‘‘subsection (k) and’’ after 21 ‘‘subject to’’; and 22 (B) by inserting ‘‘(except as provided 23 under subsection (k)(2)(C))’’ after ‘‘Administra- 24 tive Procedure Act’’; and 25 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 2395 IH (2) by adding at the end the following: 1 ‘‘(k) MINIMUM SALARY THRESHOLD.— 2 ‘‘(1) IN GENERAL.—Beginning on the effective 3 date of the Restoring Overtime Pay Act of 2023, the 4 Secretary shall require that an employee described in 5 subsection (a)(1), as a requirement for exemption 6 under such subsection, be compensated on a salary 7 basis, or equivalent fee basis, within the meaning of 8 such terms in subpart G of part 541 of title 29, 9 Code of Federal Regulations (or any successor regu- 10 lation), at a rate per week that is not less than the 11 weekly rate of the applicable annualized salary 12 threshold under paragraph (2). 13 ‘‘(2) SALARY THRESHOLD.— 14 ‘‘(A) IN GENERAL.—Subject to subpara- 15 graphs (B) and (C), the applicable annualized 16 salary threshold shall be— 17 ‘‘(i) $45,000, beginning on the effec- 18 tive date of the Restoring Overtime Pay 19 Act of 2023; 20 ‘‘(ii) $55,000, beginning on January 21 1, 2024; 22 ‘‘(iii) $65,000, beginning on January 23 1, 2025; 24 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 2395 IH ‘‘(iv) $75,000, beginning on January 1 1, 2026; and 2 ‘‘(v) beginning on January 1, 2027, 3 an annualized amount that is equal to the 4 rate of the 55th percentile of weekly earn- 5 ings of full-time salaried workers nation- 6 ally, as determined by the Bureau of Labor 7 Statistics based on data from the second 8 quarter of 2026. 9 ‘‘(B) INCREASED THRESHOLD.—The Sec- 10 retary may establish, through notice and com- 11 ment rulemaking under section 553 of title 5, 12 United States Code, a salary threshold that is 13 a rate that— 14 ‘‘(i) is greater than the applicable 15 annualized salary threshold under subpara- 16 graph (A); and 17 ‘‘(ii) is calculated based on a data set 18 and methodology established by the Sec- 19 retary that are capable of being updated in 20 accordance with subparagraph (C). 21 ‘‘(C) AUTOMATIC UPDATES.— 22 ‘‘(i) IN GENERAL.—Not later than 1 23 year after the salary threshold first takes 24 effect under subparagraph (A)(v), and an- 25 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 2395 IH nually thereafter, or, in the case in which 1 the Secretary establishes an increased sal- 2 ary threshold under subparagraph (B), an- 3 nually after establishing such increased 4 salary threshold, the Secretary shall up- 5 date the rate of the salary threshold in ef- 6 fect under subparagraph (A)(v) or (B), as 7 applicable, so that such rate is equal to— 8 ‘‘(I) in the case in which the Sec- 9 retary does not establish an increased 10 salary threshold under subparagraph 11 (B), the 55th percentile of weekly 12 earnings of full-time salaried workers 13 nationally, as determined by the Bu- 14 reau of Labor Statistics based on data 15 from the second quarter of the cal- 16 endar year preceding the calendar 17 year in which such updated amount is 18 to take effect; and 19 ‘‘(II) in the case in which the 20 Secretary establishes an increased sal- 21 ary threshold under subparagraph 22 (B), the greater of— 23 ‘‘(aa) the 55th percentile de- 24 scribed in subclause (I); and 25 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •HR 2395 IH ‘‘(bb) the increased salary 1 threshold established under sub- 2 paragraph (B), as updated in ac- 3 cordance with the data set and 4 methodology established by the 5 Secretary under subparagraph 6 (B)(ii). 7 ‘‘(ii) NONAPPLICABILITY OF RULE- 8 MAKING.—Section 553 of title 5, United 9 States Code, shall not apply to any update 10 described in this subparagraph. 11 ‘‘(D) NOTICE REQUIREMENT.—Not later 12 than 60 days before a revised salary threshold 13 under this paragraph takes effect, the Secretary 14 shall publish a notice announcing the amount in 15 the Federal Register and on the internet 16 website of the Department of Labor.’’. 17 (b) PUBLICATION OF EARNINGS.—Not later than 21 18 days after the end of each calendar quarter, the Bureau 19 of Labor Statistics shall publish on its public website, for 20 each week of such quarter, data on the weekly earnings 21 of full-time salaried workers by census region (as des- 22 ignated by the Bureau of the Census). 23 VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •HR 2395 IH SEC. 4. NONEXEMPT DUTIES LIMIT FOR BONA FIDE EXECU- 1 TIVE, ADMINISTRATIVE, OR PROFESSIONAL 2 EMPLOYEES. 3 Section 13(a)(1) of the Fair Labor Standards Act of 4 1938 (29 U.S.C. 213), as amended in section 3(a)(1), is 5 further amended— 6 (1) by striking ‘‘of a retail or service establish- 7 ment shall not’’ and inserting ‘‘shall’’; 8 (2) by striking ‘‘because of’’ and all that follows 9 through ‘‘administrative activities,’’; 10 (3) by striking ‘‘less than 40’’ and inserting 11 ‘‘not less than 20’’; and 12 (4) by striking ‘‘such activities’’ and inserting 13 ‘‘activities not directly or closely related to the per- 14 formance of executive or administrative activities’’. 15 SEC. 5. EFFECTIVE DATE. 16 This Act, and the amendments made by this Act, 17 shall take effect on the first day of the third month that 18 begins after the date of enactment of this Act. 19 Æ VerDate Sep 11 2014 23:53 Apr 08, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\H2395.IH H2395 pbinns on DSKJLVW7X2PROD with $$_JOB