24 Feb Update on Proposed Fair Labor Standard Act (FLSA) Overtime Regulations
By Lara Sadowski at Phillip Blount Associates
During a conference last November 2015, the Solicitor of Labor, M. Patricia Smith, shared news regarding the proposed Fair Labor Standard Act (FLSA) overtime regulations. She reported that the FLSA overtime eligibility rules probably would not be issued until late 2016. Even though the final rules have not been issued, this postponement is good news for businesses in that they have more time to prepare and plan.
Apparently, during the proposed rules public commenting period, the Department of Labor (DOL) received approximately 270,000 comments. This number is about three times the number of comments received when the DOL proposed changes to the overtime rules 12 years ago.
Smith further explained that the DOL decided to delay releasing the rules due to the large number of comments and the complicated nature of the law. In addition, some have suggested that politics may have played some part, as the DOL might have wanted to delay the ruling until after this year’s presidential election.
What Does This Delay Mean for Employers?
Besides having more time to plan and prepare, what should businesses and their human resources departments take away from this overtime regulations delay? The following are a few suggestions on how to proceed.
- Act Quickly
Once these rules are officially implemented, employers may not have much time to enact them in their individual organizations, especially since Solicitor General Smith gave a “late 2016” timeline for issuance.
- Further Review Exempt Employees’ Salaries
Mark Wiletsky of The National Law Review suggested that employers review their specific employees who are currently exempt under the present rules and whose salaries are close to the threshold. These particular employees may lose their exemption once the salary threshold is increased.
- Potential Duty Rules Changes
Even though no duty requirements were part of the proposed rules changes, the DOL did ask for comments on the duty rules. Mr. Wiletsky suggested that the FLSA white-collar exemption duty requirements could then change when the new rules are issued later this year. Employers should be prepared for these potential additions to the final rules.
- Audit Job Titles and Descriptions
This waiting period is a good time for employers to implement an internal audit to ensure that their employees’ job titles and descriptions are correctly classified as non-exempt or exempt.
A Quick Review of FLSA Proposed Overtime Regulations
In order to put the above-referenced suggestions in perspective, we have provided a recap of the proposed overtime regulations:
- These regulations are expected to enlarge the number of employees eligible for overtime as the Obama administration and the DOL desire to increase workers’ wages;
- These regulations will increase (possibly double) the current minimum weekly salary of $455.00 up to $900.00 for all exempt employees; and
- These regulations will impose a “bright line test,” or duties test, which will require all exempt employees to now prove that 50% of their work duties satisfy their particular exemption requirement.
When the final rules are released later this year, we will report them to you in due course. In the interim, please do not hesitate to contact us with your questions and concerns.