Human Resources News & Insights

Finally! The DOL’s finished revising the FLSA’s overtime rules

It has been a long, nervous year for the business community ever since President Obama ordered the DOL to revise the FLSA’s overtime exemption rules — to make more salaried workers overtime-eligible. 

Well, the wait for the new rules is almost over. On the DOL’s blog, Labor Secretary Thomas Perez announced that the new proposed rules have been submitted to the federal Office of Management and Budget for review.

We won’t get a peek at the rules until they’re approved by the office, but we’re not completely in the dark as to what they’ll look like.

What’s set in stone:

There are two rock-solid certainties that we know of so far.

The proposed rules will seek to:

  1. Make more — a lot more — salaried employees overtime-eligible, and
  2. Increase the minimum salary a person must earn to be exempt from overtime.

What’s up in the air:

What we don’t know yet is exactly how much the minimum salary level will be increased — but it’s expected to be significant. The level currently sits at $455 per week or $23,660 per year.

Ross Eisenbrey, vice president of the Economic Policy Institute, an organization that holds a lot of sway with Democratic policymakers, told The Huffington Post that his talks with White House officials have lead him to believe the threshold will be increased to somewhere around the $42,000 mark.

Tammy McCutchen, a former administrator for the DOL’s Wage and Hour Division, who has sat in on a number of “listening sessions” with Perez about the reg changes, is reporting it’s possible the figure could be even higher. McCutchen, who’s now an attorney for the law firm Littler Mendelson P.C., wrote on her firm’s blog that “30 congressional Democrats sent a letter to Secretary Perez calling for a salary level of $69,000.”

Most predictions, however, are that the level will be set closer to the $42,000 mark.

Another change employers can expect is a revision of the “duties tests” used to determine whether employees are exempt from overtime.

McCutchen wrote that she expects the DOL to propose adopting a California-style rule requiring employee to spend more than 50% of their time performing exempt work to be classified as exempt. She also wrote that it’s possible the DOL eliminates the concept of “concurrent duties.” Under the existing concurrent duties test, managers can be exempt even if they’re doing the same work as direct reports, as long as managing others is their “primary” function.

What’s next?

As soon as the Office of Management and Budget approves the proposed rule changes, they’ll be published in the Federal Register. At that point, the public will have its first look at them (and we’ll have a full breakdown for you).

Once in the Federal Register, the public will have an opportunity to comment on them. The DOL will then review the comments and make changes to the proposed rules if it’s deemed necessary. At that point, the rules will be re-released in their final form, and an effective date will be announced.

Bottom line: The rules aren’t likely to take effect until late 2015, early 2016. But start gearing up as soon as the proposed rules are released. It’s likely the finalized rules won’t be much different.

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