Tareen Zafrullah Comments on Proposed Overtime Rule With SHRM

In “Will Legislation Affect the Anticipated Proposed Overtime Rule?,” Society for Human Resource Management (SHRM) turned to labor and employment counsel Tareen Zafrullah for his commentary on the Restoring Overtime Pay Act of 2023, a bill that, if passed, would raise the overtime salary threshold to more than $80,000 by 2027.

If enacted, Zafrullah noted that employers could respond to increased costs resulting from the bill by raising prices, which could worsen inflation, or by consolidating positions. For example, he explained that if two exempt employees each receive an annual salary of $35,568, the current minimum amount to be exempt, the employer could discharge one employee, shift that worker’s duties to the remaining employee and increase the remaining worker’s salary to the minimum required amount.

“This could upset employees who like being classified as exempt due to the perceived prestige and because they don’t need to record all hours worked,” Zafrullah said, adding that some employees may prefer to be classified as exempt if the employer has an unlimited paid-time-off policy for exempt workers but not for nonexempt employees. “The legislation would take away this flexibility from employers and employees.”

Zafrullah explained that due to the nature of some positions—those that are performed remotely, involve travel or include responding to phone calls and e-mails outside normal work hours—it may be difficult to accurately track all hours worked. “It may be better to classify the positions as exempt, but the legislation would make it harder to classify positions as exempt,” he noted.

The bill is unlikely to pass in the Republican-controlled House of Representatives or in the Senate where it would likely need 60 votes due to the filibuster, Zafrullah predicted. “Even if Democrats gain control in the House in the future, the bill may not survive a filibuster in the Senate,” he added.

Zafrullah said the Department of Labor’s (DOL) anticipated overtime rule—like the overtime rule adopted during the Obama administration and blocked by a court—might be challenged if the salary threshold is too high. Congress alone rather than the DOL arguably has the authority to provide for automatic increases, he noted.

The full article is available for SHRM subscribers.