Overtime Rule Update

Overtime Rule Update

by Jean Seawright

It's been over one year since the U.S. Department of Labor (DOL) solicited written comments from the public about potential changes to the Fair Labor Standards Act (FLSA) White Collar overtime exemptions for administrative, executive, and professional workers. One year and no action . . . until this month that is.

Throughout September, the DOL's Wage and Hour Division held public "listening sessions" across the country to gather views on the salary level test associated with the White Collar overtime exemptions. No word yet on the outcome of these listening sessions, but they signal movement toward a revised Notice of Proposed Rulemaking (NPRM). Originally expected this October, the NPRM was delayed until January 2019, due to the volume of written comments (214,000) submitted last year.

With additional new comments from the recent listening sessions, more delays are possible; however, if the DOL issues the NPRM in early 2019, employers could see a Final Rule in early 2020. Once the Final Rule is published in the Federal Register, it will become effective on a date that is usually more than 30 days after the publication date.

The DOL hasn't given any indication of what the new proposed rules will include; however, the guaranteed annual salary level is almost certain to increase from its current level of $23,660 to somewhere in the $33,000 - $35,000 range.

In addition to issuing an NPRM addressing the White Collar overtime exemptions, the DOL announced plans to propose rules to clarify, update, and define "regular rate" requirements under the FLSA. Proposed rules related to the regular rate are expected to be published at any time. What exactly will be revised is unknown; however, one hopeful option is a change in the requirement to calculate overtime on non-discretionary bonuses and incentives paid to employees in nonexempt positions.

Note: The "regular rate" is defined as "all remuneration for employment paid to, or on behalf of, the employee" except payments specifically excluded in the FLSA, such as payments for time not worked on a holiday or when using sick or vacation time. The regular rate is used to calculate the overtime rate for employees holding positions that are classified as nonexempt.

We are continuing to monitor information from the DOL. As soon as relevant information becomes available, we will pass it along to clients. In the meantime, if you have questions about the proper classification of positions as exempt or nonexempt, the current FLSA tests for White Collar Exemptions, pay plans, recordkeeping requirements, or compliance with state or federal wage and hour regulations, give us a call. We'll help ensure that your pay practices are compliant and effective.


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