HR Minute

DOL Pumps the Brakes on Proposed Changes to Overtime Rules

One of the hot-button issues that worries today’s employer is the impending changes to the Fair Labor Standards Act’s (FLSA) overtime rules. Within the proposed changes, the questions I hear most concern the proposed increase in the minimum weekly salary necessary for employees to be classified as exempt from the FLSA’s overtime provisions. The current threshold is $455/week, or $23,660/year. Earlier this year, the United States Department of Labor (DOL) proposed a new threshold that would nearly double the minimum salary to $970/week (or $50,440/year). Such a change would dramatically increase the number of employees eligible for overtime compensation. As such, employers have been holding their collective breath trying to divine when the DOL might make any such change effective.

While the DOL has not issued any formal direction on the final rules, the cat was let out of the bag to some extent earlier this month by Solicitor of Labor Patricia Smith. Speaking at the American Bar Association’s Labor and Employment Law conference in Philadelphia, Ms. Smith indicated that the finalized changes to the FLSA’s overtime rules likely won’t be issued by the DOL until late 2016 (and therefore highly unlikely to take effect before 2017). These remarks were reported by The Wall Street Journal on November 11, 2015.  

Late 2016… it feels like there is some important event that is also happening in late 2016. Oh, that’s right, a Presidential election! It could be that the DOL will need another year to sort through the literally hundreds of thousands of comments it received during its public comment period. It could also be that there is little appetite for a pre-election implementation of the new rules, in light of many employers’ anticipated responses to the economics of such a change. Whatever the reason, employers will be happy to have the temporary reprieve.

One might also wonder if the proposed $970/week threshold is a bit of a “stalking horse.” Perhaps the end game is a compromise increase whereby more employees are overtime eligible, but not at the $50,000 salary range.

Employers should continue to watch for developments on this front, but they should be able to safely plan on the same minimum salary threshold for 2016.

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