II 

114TH CONGRESS 

2D SESSION S. 3464 

To provide incremental increases to the salary threshold for exemptions for 

executive, administrative, professional, outside sales, and computer employees under the Fair Labor Standards Act of 1938, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 29, 2016 

Mr. ALEXANDER (for himself, Ms. COLLINS, Mr. LANKFORD, Mr. SCOTT, and 

Mr. FLAKE) introduced the following bill; which was read the first time 

A BILL 

To provide incremental increases to the salary threshold for 

exemptions for executive, administrative, professional, 

outside sales, and computer employees under the Fair 

Labor Standards Act of 1938, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Overtime Reform and 

5 Review Act’’. 

6 SEC. 2. INCREMENTAL INCREASES TO SALARY THRESHOLD. 

7 (a) IN GENERAL.—Section 13 of the Fair Labor 

8 Standards Act of 1938 (29 U.S.C. 213) is amended— 


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1 (1) in subsection (a)(1), by inserting ‘‘sub2 section (k) and’’ after ‘‘subject to’’; and 

3 (2) by adding at the end the following: 

4 ‘‘(k) REQUIREMENTS FOR SALARY THRESHOLD.— 

5 ‘‘(1) IN GENERAL.—In promulgating regula6 tions for purposes of defining and delimiting the 

7 terms defining employees exempt under subsection 

8 (a)(1), the Secretary shall require that any employee 

9 exempt under such subsection is compensated at a 

10 rate that is not less than the applicable salary 

11 threshold established under paragraph (2). 

12 ‘‘(2) INCREMENTAL INCREASES.— 

13 ‘‘(A) INITIAL THRESHOLD.—The Secretary 

14 shall establish an applicable salary threshold, 

15 beginning on December 1, 2016, that is a rate 

16 of compensation equal to $35,984 per year, or 

17 $692 per week. 

18 ‘‘(B) SUBSEQUENT INCREASES.—Notwith19 standing subparagraph (A) and subject to para20 graph (3), the applicable salary threshold estab21 lished under subparagraph (A) may be in22 creased to a rate of compensation that is equal 

23 to— 

24 ‘‘(i) beginning on December 1, 2018, 

25 $39,780 per year or $765 per week; 


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1 ‘‘(ii) beginning on December 1, 2019, 

2 $43,628 per year or $839 per week; 

3 ‘‘(iii) beginning on December 1, 2020, 

4 $47,476 per year or $913 per week; and 

5 ‘‘(iv) beginning on December 1, 2021, 

6 any rate of compensation provided by the 

7 Secretary in accordance with paragraph 

8 (4) and subsection (l). 

9 ‘‘(3) REQUIREMENTS FOR INCREASES.—With 

10 respect to nonprofit organizations (including non11 profit institutions of higher education), Medicare or 

12 Medicaid dependent health care providers, and State 

13 and local governments, the increases provided in 

14 clauses (i), (ii), and (iii) of paragraph (2)(B) shall 

15 occur only if— 

16 ‘‘(A) the Comptroller General of the 

17 United States conducts and submits the study 

18 under section 3 of the Overtime Reform and 

19 Review Act in accordance with that section; and 

20 ‘‘(B) not later than June 1, 2018, the 

21 Comptroller General, in coordination with the 

22 Secretary and the Chief Counsel for Advocacy 

23 of the Small Business Administration, certifies 

24 that the increase in the salary threshold under 


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1 paragraph (2)(A) from the salary threshold in 

2 effect prior to December 1, 2016, has not— 

3 ‘‘(i) resulted in an increased rate of 

4 part-time employment; or 

5 ‘‘(ii) negatively impacted workplace 

6 flexibility, benefit structures, career ad7 vancement opportunity, or job growth. 

8 ‘‘(4) SALARY THRESHOLD AFTER DECEMBER 1, 

9 2021.—Not prior to December 1, 2021, the Secretary 

10 may issue a rule through notice and comment rule11 making in accordance with section 553 of title 5, 

12 United States Code, to change the rate of compensa13 tion for the applicable salary threshold under para14 graph (2). 

15 ‘‘(5) RULE OF CONSTRUCTION.—Nothing in 

16 this subsection shall require the Secretary to pro17 mulgate the regulations described in this subsection 

18 in accordance with the formal rulemaking provisions 

19 of sections 556 and 557 of title 5, United States 

20 Code.’’. 

21 (b) DEFINITIONS.—Section 3 of the Fair Labor 

22 Standards Act of 1938 (29 U.S.C. 203) is amended by 

23 adding at the end the following: 

24 ‘‘(z) ‘Medicare or Medicaid dependent health care 

25 provider’ means an employer who derives more than 50 


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1 percent of its revenue from payments under the Medicare 

2 program established under title XVIII of the Social Secu3 rity Act (42 U.S.C. 1395 et seq.), a State plan under the 

4 Medicaid program under title XIX of such Act (42 U.S.C. 

5 1396 et seq.), or both.’’. 

6 (c) EFFECTIVE DATE.—This section, and the amend7 ments made by this section, shall take effect on December 

8 1, 2016. 

9 SEC. 3. GAO STUDY. 

10 (a) IN GENERAL.—Not later than March 1, 2018, the 

11 Comptroller General of the United States shall conduct, 

12 and submit in accordance with subsection (c), a study on 

13 the implementation of the salary threshold provided under 

14 section 13(k)(2)(A) of the Fair Labor Standards Act of 

15 1938 (29 U.S.C. 213(k)(2)(A)). 

16 (b) CONTENTS.—The study under this section shall 

17 include each of the following: 

18 (1) The number of small entities affected by the 

19 increase in the salary threshold provided under sec20 tion 13(k)(2)(A) of the Fair Labor Standards Act of 

21 1938 compared to the salary threshold in effect 

22 prior to December 1, 2016. 

23 (2) An analysis of the impact of such increase 

24 based on regional, State, metropolitan, and nonVerDate Sep 11 2014 22:48 Oct 06, 2016 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3464.IS S3464

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1 metropolitan salary data and cost-of-living dif2 ferences. 

3 (3) The percentile of full-time salaried workers 

4 affected by such increase, including disaggregation 

5 by— 

6 (A) State; 

7 (B) industry subsector; 

8 (C) small organizations; 

9 (D) small government jurisdictions; 

10 (E) nonprofit organizations; 

11 (F) institutions of higher education as de12 fined in section 101 of the Higher Education 

13 Act of 1965 (20 U.S.C. 1001); 

14 (G) Medicare or Medicaid dependent 

15 health care providers, as defined in section 3 of 

16 the Fair Labor Standards Act of 1938 (29 

17 U.S.C. 203); and 

18 (H) small businesses. 

19 (4) Management and human resource costs for 

20 all employers in implementing such increase. 

21 (5) The impact of the increase on lower-wage 

22 industries, including by geographic area. 

23 (6) All nonfinancial costs associated with the 

24 increase, including the impact on employment (in25 cluding rates of unemployment and part-time emVerDate Sep 11 2014 22:48 Oct 06, 2016 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3464.IS S3464

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1 ployment), workplace flexibility, employee benefit 

2 structures, career advancement opportunity, new 

3 business formation and termination, and loss of 

4 market share to foreign competition. 

5 (7) The impact of the increase on the number 

6 of individuals in the United States who are ‘‘margin7 ally attached’’ or ‘‘discouraged’’ as defined by the 

8 Bureau of Labor Statistics. 

9 (c) SUBMISSION.—The study under this section shall 

10 be submitted to the Committee on Health, Education, 

11 Labor, and Pensions of the Senate, the Committee on 

12 Education and the Workforce of the House of Representa13 tives, the Committee on Small Business and Entrepre14 neurship of the Senate, and the Committee on Small Busi15 ness of the House of Representatives. 

16 SEC. 4. ENFORCEMENT OF DEPARTMENT OF LABOR RULE. 

17 (a) IN GENERAL.—Beginning on the date of enact18 ment of this Act, or December 1, 2016, whichever date 

19 is earlier— 

20 (1) the rule submitted by the Department of 

21 Labor entitled ‘‘Defining and Delimiting the Exemp22 tions for Executive, Administrative, Professional, 

23 Outside Sales and Computer Employees’’ (81 Fed. 

24 Reg. 32391 (May 23, 2016)) shall cease to have any 

25 force or effect; 


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1 (2) the Secretary of Labor shall not enforce 

2 such rule based on conduct occurring before or after 

3 such date; 

4 (3) an employee shall not have any right of ac5 tion against an employer for the employer’s failure 

6 to comply with such rule at any time prior to or 

7 after such date; and 

8 (4) any regulations that were amended by such 

9 rule shall be restored and revived as if such rule had 

10 never taken effect. 

11 (b) CLARIFICATION.—Notwithstanding subsection 

12 (a), nothing in this Act shall be construed to create a right 

13 of action for an employer against an employee for the 

14 recoupment of any payments made to the employee prior 

15 to the date of enactment of this Act, or December 1, 2016, 

16 whichever date is earlier, that were in compliance with the 

17 rule described in subsection (a)(1). 

18 SEC. 5. FAIR LABOR STANDARDS ACT OF 1938 CLARIFICA19 TION. 

20 (a) SENSE OF THE SENATE.—It is the sense of the 

21 Senate that section 13(a)(1) of the Fair Labor Standards 

22 Act of 1938 (29 U.S.C. 213(a)(1)), including as in effect 

23 on the day before the date of enactment of this Act— 

24 (1) requires the Secretary of Labor to issue a 

25 new rule through notice and comment rulemaking in 


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1 accordance with section 553 of title 5, United States 

2 Code, for each specific and enumerated change to 

3 the salary threshold provided in regulations promul4 gated under such section 13(a)(1), proposed by the 

5 Secretary of Labor; and 

6 (2) prohibits any rule that would result in a 

7 change to the salary threshold for which a specific 

8 and enumerated rate of compensation for the salary 

9 threshold was not proposed, including any procedure 

10 that automatically updates the salary threshold. 

11 (b) FLSA AMENDMENT.—Section 13 of the Fair 

12 Labor Standards Act of 1938 (29 U.S.C. 213), as amend13 ed by section 2, is further amended— 

14 (1) in subsection (a)(1), by inserting ‘‘in ac15 cordance with subsection (l)’’ after ‘‘regulations of 

16 the Secretary’’; and 

17 (2) by adding at the end the following: 

18 ‘‘(l) REQUIREMENTS FOR UPDATING THE SALARY

19 THRESHOLD.— 

20 ‘‘(1) IN GENERAL.—For any change to the sal21 ary threshold provided in regulations promulgated 

22 under subsection (a)(1), the Secretary shall— 

23 ‘‘(A) propose a specific and enumerated 

24 rate of compensation required for an employee 

25 to be exempt under such subsection; and 


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1 ‘‘(B) issue a rule through notice and com2 ment rulemaking in accordance with section 

3 553 of title 5, United States Code. 

4 ‘‘(2) PROHIBITION ON AUTOMATIC UPDATES.— 

5 In accordance with paragraph (1), the Secretary 

6 may not issue any rule that would result in a change 

7 to the salary threshold provided in regulations pro8 mulgated under subsection (a)(1) based on any pro9 cedure that automatically updates the salary thresh10 old without taking each action required under para11 graph (1).’’. 

Æ 


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