Important Information Regarding Overtime Changes

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LABOR & EMPLOYMENT 
PRACTICE GROUP

OVERTIME ALERT! PROPOSED OVERTIME EXPANSION RULE COULD AFFECT MILLIONS
   The Department of Labor (DOL) has announced a proposed change to the overtime rules that would extend overtime protections to almost 5 million workers in its first year. This would increase the percentage of the nation’s salaried workforce eligible for overtime from 8 percent to 40 percent. Currently, the salary threshold for the white-collar overtime exemption is $23,660 annually ($455 per week). Under the proposed rule, the salary threshold would increase to $50,440 annually ($970 per week). The DOL intends to increase the amount annually to keep up with inflation but business leaders and HR professionals are concerned about employers’ ability to absorb such a drastic change in such a short amount of time and the impact it will have on already complicated compensation regulations. Specifically, it is believed this change will disproportionately affect non-profits, the service sector, and certain geographic areas of the country.

   For highly compensated employees who are currently exempt from overtime at a $100,000 threshold, the proposed rule intends to increase that threshold to $122,148 and it is anticipated that number may increase even more before the final rule is issued. However, the proposed rule fails to address any changes to the FLSA job duties test which provides that for the salary exemption to apply, the employee must also have certain primary job duties to reach exempt status. The DOL is still considering whether revisions to the duties test are necessary in order to ensure that it fully reflects the purpose of the exemption.
   What could this mean for employers? If the proposed rule becomes law, exempt salaried employees may no longer be exempt from overtime if their salaries do not meet these higher thresholds. Employers may need to revisit and review their overtime policies and compensation schedules.
   Have concerns? Add your comments: The proposed rule was published on July 6, 2015 in the Federal Register (80 FR 38515) and interested parties are invited to submit written comments on the proposed rule at www.regulations.gov on or before September 4, 2015. Only comments received during the comment period identified in the Federal Register published version of the Notice of Proposed Rulemaking (NPRM) will be considered part of the rulemaking record.
SLG will continue to provide updates regarding the proposed rule as they become available.
Sources:
1. SHRM, “DOL Announces Long-Awaited Overtime Expansion Proposal,” http://www.shrm.org/legalissues/federalresources/pages/dol-announces-ot-changes.aspx;
2. U.S. Dept. of Labor, “Notice of Proposed Rulemaking: Overtime,” http://www.dol.gov/whd/overtime/NPRM2015/









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