Employers and others have until September 25 to submit comments to shape the rule governing which workers are eligible for overtime pay. Once the deadline passes, employers will face a waiting game before learning what changes may be in store.
In late July, the U.S. Department of Labor (DOL) announced it was soliciting comments through a Request for Information (RFI) dealing with the long-stalled and much-debated rule aimed at raising the salary threshold in the Fair Labor Standards Act (FLSA) so that more workers will be eligible for overtime pay.
An updated rule was issued in May 2016 during the Obama administration, but it never took effect because of a court injunction. It would have added approximately 4.2 million employees to the ranks of workers eligible to collect overtime pay of at least 1½ times their regular rate of pay for hours worked in excess of 40 in a workweek. The rule sought to raise the minimum salary level for workers exempt from overtime pay from $455 a week ($23,660 a year) to $913 a week ($47,476 a year). Foes of the rule maintained that the salary threshold more than doubling would be too burdensome on employers.
Burton J. Fishman, a contributor to Federal Employment Law Insider and attorney with Fortney & Scott, LLC, in Washington, D.C., says he expects the new comments to largely match previous arguments on where to set the minimum salary threshold. “We know a lower figure than $47,000 will come out in the end,” he says. He anticipates a rule setting the threshold in the low $30,000 range “with not much more attention to duties.”
When the Obama-era rule was being formulated, many predicted the DOL would adjust not just the salary threshold but also the duties that can make an employee exempt. Currently, both salary and duties are considered. In addition to meeting the minimum salary threshold, a worker must perform duties that are primarily executive, administrative, or professional.
Amelia J. Holstrom, a contributor to Massachusetts Employment Law Letter and attorney with Skoler, Abbott & Presser, P.C., in Springfield, Massachusetts, also expects a new rule to have a lower salary threshold than the rule issued during the Obama administration.
“I anticipate that the DOL will get a lot of comments from the business community indicating that the Obama-era rule would have been too burdensome to comply with,” Holstrom says. “I also think you will see the majority of employers agree that some increase in the salary threshold is necessary, and I anticipate most will support an increase consistent with inflation.”
Holstrom says Labor Secretary Alexander Acosta agrees that an increase in the threshold is necessary, just not as much as the increase in the Obama-era rule. She also says some employers, such as nonprofits, think any increase is too burdensome and suggests that certain industries or businesses be exempt.
In addition, Holstrom says a new rule may make changes to the duties test as well as the salary test since the DOL asked for input on that issue in its RFI. But Fishman doesn’t expect a new rule to include changes to the duties test, explaining that such a change was a Democratic concern and not a Republican issue.
Another RFI question sought opinions on how the salary level should be set—e.g., by state, metropolitan statistical area, U.S. Census region, employer size, or something else. Even though the DOL included the question, Fishman doesn’t expect the department to propose a new rule making that kind of change. “I don’t think [the] DOL has the bandwidth to be very creative,” he says, adding that he thinks a new rule will focus on the salary threshold and little else.
Nathan L. Whatley, a contributor to Oklahoma Employment Law Letter and attorney with McAfee & Taft in Oklahoma City, Oklahoma, says he has heard from clients who have submitted comments. “The overall message being sent is that employers are concerned about the financial impact that a large change in the minimum salary requirement would have on their businesses,” he says. “Another comment that was repeated was a belief that the current minimum salary level, or a slightly increased minimum, [is] appropriate for many regions of the country and that the DOL should not raise the minimum salary across the board based on pay levels in California or the Northeast.”
Whatley says he expects a new proposed rule to include an adjustment to the minimum salary amount and an inflation-based mechanism for making future adjustments.