It appears the Department of Labor’s final rule significantly changing the overtime regulations under the Fair Labor Standards Act (“FLSA”) will arrive earlier than initially expected. On March 14, 2016, the Department of Labor sent its final rule to the White House’s Office of Management and Budget (“OMB”). It typically takes the OMB 1 to 2 months to publish the final rule, meaning employers can expect the rule to be published in early to mid-May 2016 and effective 60 days later in July 2016.
The decision to push for the regulations to be effective prior to 2017 is likely due to the upcoming presidential elections. Under the Congressional Review Act, Congress has 60 days to pass a joint resolution disapproving the regulation after new regulations are published. Typically, this process does not pose much of a threat to a sitting president because he or she can veto the resolution. However, if the 60-day period were to fall under a president who was against the regulations, it could be successfully rejected.
The proposed rule under the FLSA was issued on July 6, 2015. While the final rule will not be identical to the proposed rule, it provides employers guidance on the major changes and how to prepare for the upcoming regulations.
Employers can expect a stark increase in the number of employees who will qualify for overtime pay. Under the proposed regulations, full-time employees within the 40th percentile of wage earners qualify for overtime. Currently, the Department evaluates this rate to be $921/week. This rate of pay is more than double the current wage for qualified employees. This change to a percentile also means that the rate of pay for qualified workers will vary from year-to-year.
Currently, highly compensated workers are exempted from the overtime pay requirement. The proposed rule increases the rate of pay to be a “highly compensated employee” from $100,000 to $120,000.
The Department has also stated it is considering narrowing the classes of workers that are exempt from the overtime law. The proposed rule does not state how the class of exempted workers will be changed.
These proposed changes should not be considered final. However, employers should prepare now to ensure compliance. All employers should complete the following before the final rule is issued in July:
- Ensure job descriptions for each job title are accurate. These descriptions will be used when determining whether employees qualify as an exempt employee.
- Review salaries to determine which employees may be affected.
- Develop a plan to determine the most cost-effective way to comply with the regulations.
TKG&K’s employment law division is available to help all employers and employees prepare for the new overtime regulations.
This blog is offered as an educational tool to provide general information to the public. No specific information is provided. By reading this blog, you agree that no attorney-client relationship has been established and no legal advice has been provided. If you are involved in a support case or intend to file one, please seek the assistance of a licensed attorney. We provide no guarantee as to the completeness or accuracy of this blog, nor that it is up to date. Any information that you may submit through this blog is not protected by the attorney-client privilege.