Tuesday September 12th 2017
The Labor Department’s Wage and Hour Division has announced a new request for information concerning the still-in-limbo overtime rule that revised the federal Fair Labor Standards Act’s salary thresholds for overtime eligibility.
The request is the DOL’s way of obtaining public comments from employers and other parties who would be affected by the Obama-era rule, which was expected to extend FLSA protections and overtime eligibility to 4.2 million additional workers across the country.
The rule provides that workers making less than $47,500 per year ($914 per week) would be entitled to overtime wages after working more than 40 hours in a week. This is an increase from the FLSA’s annual threshold of $23,660 ($455 per week). The rule also increases the minimum salary for highly compensated employees from $100,000 to $134,004, and requires companies to implement a mechanism that updates compensation levels for all exempt employees every three years.
The rule was supposed to be in effect by now. But it is currently on hold after being blocked by a temporary injunction, which was issued in response to a lawsuit filed by a coalition of business groups and 21 states. The court determined that the department exceeded its authority in establishing a salary threshold, as it does not have the authority to create such a test.
Oral arguments in the court case have been tentatively scheduled for the week of Oct. 2.
In the meantime, the current thresholds of $23,660 and $100,000 have been in place since 2004 and remain in effect until the Trump administration’s Labor Department decides how to move forward.
The Trump administration has not said it won’t raise the overtime threshold for workers covered under the FLSA. But it has expressed concerns that the proposed salary threshold of $47,500 is too high.
Adding to the rule’s legal challenges, the transition of power to the Trump administration means that the rule is subject to Executive Order 13777, which was signed by President Trump on Feb. 24. Under the order, agencies are requested to review regulations that may have economic impacts and increase regulatory burden.
Additionally, after being sworn in on April 28, Labor Secretary Alexander Acosta has indicated that an adjustment between the existing and proposed thresholds is possible. That issue was addressed during Secretary Acosta’s confirmation hearing, in which he suggested an adjustment based on straight inflation “around $33,000.”
The Labor Department has left the comment period on the overtime rule open until Sept. 25. Specifically, the agency seeks to determine if the established standard salary level effectively identifies potential exempt employees, if and why a different salary level would be more appropriate, and the basis for setting a different salary level.
The agency provides 11 questions that address inflation adjustments, the potential for multiple standard salary levels, the long and short test salary level methodology, and the standards duties test. The questions also address highly compensated employees, the extent to which employers have increased salaries in 2016 in anticipation of the rule changes, tests for exemptions, and the treatment of nondiscretionary bonuses and incentive payments.
The comments received will assist the Department in formulating a proposal to revise the overtime rule as written by the Obama administration.
While the final overtime rule has been met with several challenges, the issues remain on the radar. Regardless of the outcome, this issue is likely be a major development in labor regulations under the Trump administration.
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