Employer input sought on new overtime regs

by McAfee & Taft
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As we previously reported, the U.S. Department of Labor failed to challenge a federal district court’s blocking of the new overtime rule that was set to go into effect last December and, instead, signaled its intent to revisit the Fair Labor Standards Act’s ‘white collar’ exemption and salary thresholds anew.

Last week, the U.S. Department of Labor followed through by issuing a Request for Information (“RFI”) that seeks employers’ written comments on the FLSA’s executive, administrative and professional exemption on or before September 25, 2017.

The RFI signals that this administration may have a much different approach to changes to the FLSA, and that it may not set new salary levels as high as the Obama administration. At the very least, the RFI demonstrates the administration’s desire to receive additional feedback from the public before making any further changes to the proposed regulations.

A summarized version of the 11 questions in the RFI is as follows:

  1. Would updating the 2004 salary level for inflation be an appropriate basis for setting the standard salary level and, if so, what measure of inflation should be used?
  2. Should the regulations contain multiple standard salary levels? If so, how should these levels be set: by size of employer, census region, census division, state, metropolitan statistical area, or some other method?
  3. Should the Department set different standard salary levels for the executive, administrative and professional exemptions as it did prior to 2004 and, if so, should there be a lower salary for executive and administrative employees as was done from 1963 until the 2004 rulemaking?
  4. To be an effective measure for determining exemption status, should the standard salary level be set within the historical range of the short test salary level, at the long test salary level, between the short and long test salary levels, or should it be based on some other methodology?
  5. Does the standard salary level set in the 2016 Final Rule work effectively with the standard duties test or, instead, does it in effect eclipse the role of the duties test in determining exemption status?
  6. To what extent did employers, in anticipation of the 2016 Final Rule’s effective date on December 1, 2016, increase salaries of exempt employees in order to retain their exempt status, decrease newly non-exempt employees’ hours or change their implicit hourly rates so that the total amount paid would remain the same, convert worker pay from salaries to hourly wages, or make changes to workplace policies either to limit employee flexibility to work after normal work hours or to track work performed during those times?
  7. Would a test for exemption that relies solely on the duties performed by the employee without regard to the amount of salary paid by the employer be preferable to the current standard test?
  8. Does the salary level set in the 2016 Final Rule exclude from exemption particular occupations that have traditionally been covered by the exemption and, if so, what are those occupations?
  9. The 2016 Final Rule for the first time permitted non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level. Is this an appropriate limit or should the regulations feature a different percentage cap?
  10. Should there be multiple total annual compensation levels for the highly compensated employee exemption?
  11. Should the standard salary level and the highly compensated employee total annual compensation level be automatically updated on a periodic basis to ensure that they remain effective, in combination with their respective duties tests, at identifying exempt employees?

The RFI can be found here.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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