Restoring Overtime Pay Act of 2023

Subjects: Labor and Employment


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2395 Introduced in House (IH)]

&lt;DOC&gt;






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 purposes.


_______________________________________________________________________


                    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, administrative, and 
   professional employees exempt from Federal overtime compensation 
 requirements, and automatically update such threshold each year, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Restoring Overtime Pay Act of 
2023''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The Fair Labor Standards Act of 1938 (29 U.S.C. 201 et 
        seq.) established overtime compensation requirements for 
        certain employees when they work more than 40 hours in a given 
        workweek.
            (2) Under section 13(a)(1) of such Act, Congress delegated 
        to the Secretary of Labor the authority to define and delimit 
        the terms relating to the exemption for bona fide executive, 
        administrative, and professional employees (commonly known as 
        the ``white-collar exemption'').
            (3) For more than 75 years, the Secretary of Labor has 
        exercised the Secretary's delegated authority to issue 
        regulations that define and delimit the terms relating to the 
        white-collar exemption by applying a duties test and applying a 
        minimum compensation level (or salary threshold).
            (4) The Secretary of Labor began utilizing a salary 
        threshold in the initial regulations defining and delimiting 
        the terms relating to the white-collar exemption, which were 
        first issued in 1938.
            (5) Congress has long approved the use of a salary 
        threshold by the Secretary of Labor, as demonstrated by the 
        fact that Congress has amended the Fair Labor Standards Act of 
        1938 at least 10 times since 1938 and has not precluded the 
        Secretary from using a salary threshold.
            (6) The salary threshold became woefully out of date and 
        ineffective as a result of not being sufficiently updated to 
        keep pace with the changing economy, as evidenced by the fact 
        that 63 percent of all full-time salaried workers were 
        guaranteed overtime pay under section 7 of the Fair Labor 
        Standards Act of 1938 based on their salaries in 1975 while, in 
        2022, less than 15 percent of all full-time salaried workers 
        are guaranteed such overtime pay under the overtime rule 
        promulgated on September 27, 2019.
            (7) Weak overtime protections also hurt the many workers 
        who are forced into part-time jobs but need full-time jobs to 
        support themselves and their families. When employers can no 
        longer overwork employees who are exempt from overtime pay 
        because of lax standards, they will be forced to spread work 
        and hours across their workforce. Restoring overtime 
        protections is especially important in 2023, as the economy of 
        the United States is still recovering from the pandemic and 
        many workers report their employers demanding excessive hours.
            (8) In 2015, when the Department of Labor proposed an 
        increase to the overtime salary threshold rule under the Obama 
        Administration, it found that the historic range of the 
        overtime salary threshold under the Fair Labor Standards Act of 
        1938 ran from approximately the 35th to the 55th percentile of 
        weekly earnings for all full-time salaried workers. By phasing 
        the overtime salary threshold back up to the 55th percentile of 
        earnings of full-time salaried workers nationally--which after 
        adjusting for inflation is projected to translate to an 
        annualized amount of $73,551 in 2021 and $82,745 by 2026 
        (roughly the level of the boldest State overtime threshold 
        increase)--the United States can restore overtime protections 
        to historic levels.

SEC. 3. MINIMUM SALARY THRESHOLD FOR BONA FIDE EXECUTIVE, 
              ADMINISTRATIVE, AND PROFESSIONAL EMPLOYEES EXEMPT FROM 
              FEDERAL OVERTIME COMPENSATION REQUIREMENTS.

    (a) In General.--Section 13 of the Fair Labor Standards Act of 1938 
(29 U.S.C. 213) is amended--
            (1) in subsection (a)(1)--
                    (A) by inserting ``subsection (k) and'' after 
                ``subject to''; and
                    (B) by inserting ``(except as provided under 
                subsection (k)(2)(C))'' after ``Administrative 
                Procedure Act''; and
            (2) by adding at the end the following:
    ``(k) Minimum Salary Threshold.--
            ``(1) In general.--Beginning on the effective date of the 
        Restoring Overtime Pay Act of 2023, the Secretary shall require 
        that an employee described in subsection (a)(1), as a 
        requirement for exemption under such subsection, be compensated 
        on a salary basis, or equivalent fee basis, within the meaning 
        of such terms in subpart G of part 541 of title 29, Code of 
        Federal Regulations (or any successor regulation), at a rate 
        per week that is not less than the weekly rate of the 
        applicable annualized salary threshold under paragraph (2).
            ``(2) Salary threshold.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the applicable annualized salary threshold shall 
                be--
                            ``(i) $45,000, beginning on the effective 
                        date of the Restoring Overtime Pay Act of 2023;
                            ``(ii) $55,000, beginning on January 1, 
                        2024;
                            ``(iii) $65,000, beginning on January 1, 
                        2025;
                            ``(iv) $75,000, beginning on January 1, 
                        2026; and
                            ``(v) beginning on January 1, 2027, an 
                        annualized amount that is equal to the rate of 
                        the 55th percentile of weekly earnings of full-
                        time salaried workers nationally, as determined 
                        by the Bureau of Labor Statistics based on data 
                        from the second quarter of 2026.
                    ``(B) Increased threshold.--The Secretary may 
                establish, through notice and comment rulemaking under 
                section 553 of title 5, United States Code, a salary 
                threshold that is a rate that--
                            ``(i) is greater than the applicable 
                        annualized salary threshold under subparagraph 
                        (A); and
                            ``(ii) is calculated based on a data set 
                        and methodology established by the Secretary 
                        that are capable of being updated in accordance 
                        with subparagraph (C).
                    ``(C) Automatic updates.--
                            ``(i) In general.--Not later than 1 year 
                        after the salary threshold first takes effect 
                        under subparagraph (A)(v), and annually 
                        thereafter, or, in the case in which the 
                        Secretary establishes an increased salary 
                        threshold under subparagraph (B), annually 
                        after establishing such increased salary 
                        threshold, the Secretary shall update the rate 
                        of the salary threshold in effect under 
                        subparagraph (A)(v) or (B), as applicable, so 
                        that such rate is equal to--
                                    ``(I) in the case in which the 
                                Secretary does not establish an 
                                increased salary threshold under 
                                subparagraph (B), the 55th percentile 
                                of weekly earnings of full-time 
                                salaried workers nationally, as 
                                determined by the Bureau of Labor 
                                Statistics based on data from the 
                                second quarter of the calendar year 
                                preceding the calendar year in which 
                                such updated amount is to take effect; 
                                and
                                    ``(II) in the case in which the 
                                Secretary establishes an increased 
                                salary threshold under subparagraph 
                                (B), the greater of--
                                            ``(aa) the 55th percentile 
                                        described in subclause (I); and
                                            ``(bb) the increased salary 
                                        threshold established under 
                                        subparagraph (B), as updated in 
                                        accordance with the data set 
                                        and methodology established by 
                                        the Secretary under 
                                        subparagraph (B)(ii).
                            ``(ii) Nonapplicability of rulemaking.--
                        Section 553 of title 5, United States Code, 
                        shall not apply to any update described in this 
                        subparagraph.
                    ``(D) Notice requirement.--Not later than 60 days 
                before a revised salary threshold under this paragraph 
                takes effect, the Secretary shall publish a notice 
                announcing the amount in the Federal Register and on 
                the internet website of the Department of Labor.''.
    (b) Publication of Earnings.--Not later than 21 days after the end 
of each calendar quarter, the Bureau of Labor Statistics shall publish 
on its public website, for each week of such quarter, data on the 
weekly earnings of full-time salaried workers by census region (as 
designated by the Bureau of the Census).

SEC. 4. NONEXEMPT DUTIES LIMIT FOR BONA FIDE EXECUTIVE, ADMINISTRATIVE, 
              OR PROFESSIONAL EMPLOYEES.

    Section 13(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
213), as amended in section 3(a)(1), is further amended--
            (1) by striking ``of a retail or service establishment 
        shall not'' and inserting ``shall'';
            (2) by striking ``because of'' and all that follows through 
        ``administrative activities,'';
            (3) by striking ``less than 40'' and inserting ``not less 
        than 20''; and
            (4) by striking ``such activities'' and inserting 
        ``activities not directly or closely related to the performance 
        of executive or administrative activities''.

SEC. 5. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect on 
the first day of the third month that begins after the date of 
enactment of this Act.
                                 &lt;all&gt;
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