Overtime: DOL sets tentative deadline for final rules
It appears as though the Obama administration isn’t afraid of how its changes to the FLSA’s overtime exemption rules will play in the court of public opinion.
A prediction floating around — after the Solicitor of Labor M. Patricia Smith announced the DOL’s changes to the overtime rules would be delayed until “late 2016” — was that the administration would wait until after the presidential election to unveil the final rules.
The thinking behind this hypothesis: The rules — which are sure to be wildly unpopular in the business community — could give the GOP another feather in its political cap, potentially helping it win the White House. That’s if the rules were released prior to the election.
DOL targeting July
Giving the GOP more campaigning ammo doesn’t appear to be a fear for the Obama administration, at least not yet. In the DOL’s fall 2015 regulatory agenda, the agency published that it’s targeting July 2016 for the release of the final rules.
The deadline isn’t set in stone, and July is still pretty far away, but it does provide clues as to where the DOL’s at with the rules.
Bottom line: Employers are most likely looking at the new rules being released prior to the election.
60 days
While a mid- to late-2016 release date is welcome news to business that have a lot of work to do in order to make sure they’re ready to comply with the rules, they won’t have much time to maneuver once the final rules are published.
Smith announced that once the final rules are published, employers will have just 60 days to comply.
That means employers shouldn’t wait until the final rules are issued to come up with a compliance strategy. There simply won’t be enough time, at least for a lot of companies, to start from scratch once the rules do come out.
And while employers don’t know for sure what the final rules will look like, they do know a few things upon which they can start building their compliance strategies.
For starters:
- The minimum salary threshold will rise … significantly. The current threshold a worker must hit to be overtime-exempt is $23,660. The proposed rules seek an increase to $50,440. And while it may not climb quite that high, it will climb — likely to at least $40,000 or so.
- The threshold will automatically increase. For the first time ever, the salary threshold will be tied to an automatic-escalator, so it can keep pace with inflation — and so major legislative changes aren’t needed every time lawmakers want it to increase.
- The highly compensated employee threshold will climb. It has been proposed that the total annual compensation threshold that must be hit to exempt highly compensated employees would climb to $122,148 from $100,000. While those numbers could change in the final rules. Employers can expect a higher threshold.
- The DOL is looking at making changes to the duties tests. The DOL hasn’t suggested changing the executive, administrative, professional, computer or outside sales duties tests (see them here) yet. But the agency did specifically ask for comments on whether the tests should be changed and whether they’re working to screen out employees who are not bona fide white collar exempt employees.
