Last June, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking (NPRM) setting forth its rationale for a new and higher salary test for employees classified as exempt from overtime under the White Collar Exemptions covering executive, administrative, and professional employees. The DOL proposed a new guaranteed salary level of $50,440 per year------- an increase of 113% over the current $23,660 salary level. (For details about this proposed change and others in the NPRM, refer to our July 2015 e-bulletin.)

Since March 2014, when President Obama issued his directive to the Secretary of Labor to "modernize the overtime rules," it has been widely anticipated that the Final Rule would be effective prior to the 2016 elections. Why? Because of the potential for a Republican President to be elected who, by all accounts, would likely direct the DOL to delay the release of the Final Rule or revoke it altogether. Proponents of the overtime changes know that the sooner the changes take effect, the harder it will be to overturn them.

For the Final Rule to be effective before the November election and for employers to have a minimum 120-day period to comply, it would have to be issued within the next two months.

We now know this will not occur.

Although the DOL confirmed its intent for the Final Rule to be effective in 2016, it recently hinted that it would not be issued until later in 2016. The delay, they say, is due to the significant volume of comments (270,000) about the NPRM that were received during the public comment period.

The announced delay could mean that employers will have a shorter period of time, such as 60 days, to make the necessary changes to comply.

A limited period of time to ensure compliance will leave many employers scrambling to make required changes that could be very different from those issued in the NPRM. Indeed, we know that the DOL has the authority to issue a Final Rule that bears little resemblance to the NPRM. Because the DOL indicated in the NPRM that changing the duties tests associated with the White Collar Exemptions was not off the table, many employers fear that the Final Rule will do just that.

We certainly hope this does not occur; however, "mum" is the word at the DOL and, at this point, no one really knows what the agency has up its sleeve. If the NPRM is adopted in its current format, many employers will be facing changes that could include, among others:

• Increased salary rates for employees who meet the duties tests for an exemption, but not the new salary level test
• Changes to bonus or incentive programs
• Changes to pay ranges in compensation plans
• Reclassification of positions
• Restrictions on work hours to curb overtime
• New recordkeeping procedures
• Changes to performance-management programs

For now, employers should proactively audit their pay plans, pay rates, and compensation practices to assess the changes that will likely be necessary and to identify alternatives for minimizing costs and liability. The audit should include a thorough evaluation and analysis of position classifications, job descriptions and job duties, pay plans, bonus and commission programs, recordkeeping practices, and pay-related policies.

If you are interested in having the assessment conducted by an outside professional, we can assist by conducting a comprehensive onsite HR audit that will help you prepare for the DOL changes. Clients receive priority scheduling and reduced rates.