Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Ms. COLLINS. Mr. President, I join my colleagues to call for action to prevent the version of the overtime rule that the U.S. Department of Labor finalized this past May from going into effect on December 1. I want to commend Chairman Alexander, Senator Scott, and Senator Lankford for their leadership in this area.

Federal regulations can impose unexpected and costly requirements on small businesses, educational institutions, and nonprofit organizations. The new U.S. Department of Labor rule on overtime pay is a prime example that could harm the very workers it intends to help, cause small businesses to curb hiring, and force universities and colleges to either raise tuition or cut programs.

The new rule will double the annual salary threshold from $23,660 to $47,476 for mandatory overtime, effective December 1.

While it is time for a reasonable update in the threshold, doubling the threshold overnight and with so little time for employers to prepare will have negative consequences. I have spoken with small businesses, educational institutions, and nonprofit organizations across Maine, and it is clear that this huge and sudden increase in the threshold is far too much and too fast. Rather than producing bigger paychecks, this new rule is likely to produce reduced hours, benefits, and flexibility for Maine workers.

Many small employers in Maine have told me that they do not have the margins to pay overtime to salaried employees earning up to $47,476.

Some will have to shift their employees to hourly positions. Formerly salaried employees used to flexibility in their work schedules will have to track closely each hour they work each week, instead of being able to leave work to pick up a child at school without worrying about the impact on their paycheck.

The new rule is also a problem for those seasonal businesses in Maine that make an effort to keep their employees on the payroll all year round. In the summer and fall, these employees often work for more than 40 hours a week, but in the winter and spring, they usually work far fewer than 40 hours a week. The current system allows them to have a constant, consistent year-round salary that they can count on. The new overtime rule would upend that and result in many workers being moved from salaried to hourly positions or even being let go during winter months. This will make it harder for workers to make ends meet and harder for employers to retain high-quality employees.

Although the regulation is touted as a means of boosting employees' pay, a study commissioned by the National Retail Federation found that most employees would see no change in net pay. Instead, many employees would see their hours reduced to avoid overtime, while others would see their base wages, benefits, or bonus pay decreased in order the offset the added payroll expense.

Moreover, the National Federation of Independent Business, a leading voice for small business, has noted that the new overtime rule would particularly hurt small businesses in rural areas. The Maine Department of Labor believes that the rule would have a disproportionate economic effect on Maine businesses, where salaries and the cost of living are not as high as in other regions of the country. For instance, the cost of living in Bangor is roughly 37 percent lower than in Washington, DC.

While $47,476 might seem like a reasonable threshold for an employee living in a high-cost area like Washington, DC, it is the equivalent of a salary of more than $74,000 in Bangor.

Businesses are not alone in their concern. Nonprofit organizations are also struggling with the impact on their workers and those whom they serve. The executive director for Habitat for Humanity in greater Portland states that the ``new overtime rules will so drastically change our current compensation obligations that we may no longer be able to give our workers the benefits, schedules and other incentives that drew them to us in the first place.'' And he notes that ``services to those in need will be reduced and organizational funding will decline as resources are spent on overhead instead of programs.'' Indeed, nonprofit organizations would be among the hardest hit by this rule. Cutbacks in essential services are predicted by the Salvation Army, youth services providers, home health care services, and blood centers throughout the country.

In addition, higher-education groups nationwide are urging the Department of Labor to take a more measured approach. When the final rule was published last spring, Molly Corbett Broad, the president of the American Council on Education, noted that ``requiring such a dramatic and costly change to be implemented so quickly will leave many colleges with no choice but to respond to this regulation with a combination of tuition increases, service reductions, and, possibly, layoffs.''

She went on to note that those harmed by the new rule will include ``a wide array of non-faculty employees--from athletics coaches and trainers to admissions recruiters and student affairs officers--whose work is not well suited to hourly wage status and who will face diminished workplace autonomy and fewer opportunities for flexible work arrangements and career development.''

This is not a theoretical concern. The University of Maine system would face an estimated $14 million increase in annual operating costs if it restructured employees' pay to maintain the exempt status of these workers. To avoid changes in its salary structure that could force tuition increases or threaten university services, Maine's University System is conducting an arduous and costly position realignment that could still result in an increase in annual labor costs.

The overtime threshold has not been increased in a number of years and should be raised, but doubling virtually overnight and with so little time for employers to prepare will be extremely costly and damaging to small businesses, universities, nonprofit organizations, and so many other segments of our Nation's economy and our society.

That is why I am a cosponsor of the resolution of disapproval of this rule introduced by Chairman Alexander and Senator Scott's Protecting Workplace Advancement and Opportunity Act, which would ensure a balanced approach to updating Federal overtime rules by requiring that any new regulation on overtime consider the impact on small business and nonprofits, differences in geographical regions, and impacts on lower-wage industries, startups, and workers.

Today I am joining Chairman Alexander in introducing legislation that would phase in a more reasonable increase to the overtime threshold over five years. I am also cosponsoring another bill introduced today by Senator Lankford that would delay the effective date of the new rule by 6 months, from December 1, 2016, to June 1, 2017, to allow more time for Congress to work on this issue.

The flurry of bills on this topic is indicative of just how much concern there is about the potential harm this rule could inflict on the very workers it intends to help, on small businesses, on students, on nonprofits, and on countless others.

I urge my colleagues on both sides of the aisle to join me in rejecting this onerous and ill-advised rule.

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