Department of Labor’s Proposed Overtime Rules Move Forward

According to an HR Morning article written by Christian Schappel, The Department of Labor’s (DOL) revised rules regarding the white-collar overtime exemption regulations has advanced.

The final ruling is now in the hands of the Office of Management and Budget (OMB). This will be the final step before the rule is published and made public for all to see.  Based on past practice, it should be approved in four to six weeks, perhaps longer.  Employers may be able to see the final rule by early to mid-May.

Congress Has The Right to Disapprove

Congress has the right to disapprove “major” final rules promulgated by federal agencies, like the DOL. However, the disapproval can be shot down by a presidential veto. The act states that if a major rule is submitted to Congress with fewer than 60 session days remaining on the legislative calendar, then the next Congress will have a similar 60-day period to consider the rule. And according to recent calculations by the Congressional Research Service, if the DOL’s overtime rule isn’t released by the OMB by May 16, the rule will be at the mercy of the next Congress and president.

HR 4773, The Protecting Workplace Advancement and Opportunity Act, was just introduced in the Senate and House by Sen. Tim Scott (R-S.C.) and Rep. Tim Walberg (R-Mich.) and cosponsored by Sen. Lamar Alexander (R-Tenn.) and Rep. John Kline (R-Minn.), would delay publication of the Labor Department’s expected regulation, dramatically expanding mandatory federal overtime pay, despite widespread opposition from stakeholders. The bill would require the department to first conduct a comprehensive economic analysis on the impact of mandatory overtime expansion to small businesses, nonprofits, and public employers.

Rundown of the Act

    • Drastically increasing the FLSA’s salary threshold. The current minimum salary a worker has to be paid to be exempt from overtime is $455 per week or $23,660 per year. Under the proposed rule, it would jump to $970 a week or $50,440 per year. The DOL calculated that $50,440 would equal the 40% of weekly earnings for full-time salaried workers.
    • The highly compensated employee threshold will also climb. The total annual compensation requirement needed to exempt highly compensated employees would climb to $122,148 from $100,000 — or the 90th percentile of salaried workers’ weekly earnings.
    • The salary thresholds will automatically increase. For the first time ever, the salary thresholds would be tied to an automatic-escalator. The DOL is proposing using one of two different methodologies to do this — either keeping the levels chained to the 40th and 90th percentiles of earnings, or adjusting the amounts based on changes in inflation by tying them to the Consumer Price Index.
    • No changes to the duties tests have been proposed. The DOL didn’t suggest changing the executive, administrative, professional, computer, or outside sales duties tests (see them here) as of yet. However, the agency sought comments on whether they should be changed and whether they’re working to screen out employees who are not bona fide white-collar exempt employees. Early indicators were that the DOL would look to adopt a California-style rule in which employees would be required to spend more than 50% of their time performing exempt duties to be classified as exempt.
    • Discretionary bonuses wouldn’t count toward salary threshold. In the proposed rule, discretionary bonuses weren’t part of a person’s salary calculation — but that could change depending on the comments the agency received. Currently, such bonuses are only included in calculating total compensation under the highly compensated employee test. But the DOL said some stakeholders are asking for broader inclusion of bonuses in salary calculations.

NOTE: The MAB researched the impact on broadcasters and according to MAB Human Resources Attorney Terry Kasiborski, Washington Attorney David Oxenford of Wilkinson Barker Knauer, LLP, and NAB SR. VP & Corporate Counsel, Bart Stringham, there doesn’t appear to be any changes to the exemptions afforded certain broadcast personnel like reporters, anchors, engineers and outside sales reps.

Stay tuned!

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