DOL Official: Overtime Rule Benefits Employers and Employees

Organizations need to move past ‘phase of fighting’ to compliance, says wage and hour administrator

By Allen Smith, J.D. Jun 19, 2016
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The overtime rule won’t just benefit employees, according to David Weil, administrator of the Wage and Hour Division of the U.S. Department of Labor (DOL). Employers will benefit by now having greater certainty about who is covered by the white-collar exemptions, he told attendees on June 19 at the Society for Human Resource Management (SHRM) 2016 Annual Conference & Exposition.

Automatic updates to the salary threshold triennially will help to provide this certainty. He said the nation would be “out of the ridiculous position where the threshold becomes out of date.”

Weil said the Wage and Hour Division was “not engaging in a game of ‘gotcha,’ but a mission of compliance.”

That mission is “a fair day’s pay for a fair day’s work,” he said, adding that this overlaps with SHRM’s mission of advancing the HR profession. He encouraged conference attendees to move past the “phase of fighting” over what’s in the rule and to move toward compliance with it.

The rule will stand the test of time, he predicted, characterizing the existing overtime threshold for the white-collar exemptions of $23,660 as “broken.” (The new $47,476 threshold takes effect Dec. 1.)

Rule’s Overhaul Was Tall Task

Before the DOL finalized the most recent overtime rule, the agency had updated its overtime regulations only once since 1975, Weil said. To show “how out of whack” it had become, he explained that in 1975, 62 percent of full-time salaried workers were below the exempt salary threshold. Today, just 7 percent of workers are below the current salary threshold.

When President Barack Obama ordered the DOL to modernize the overtime rule, the department faced three challenges, Weil said:

  • The protections of the FLSA were broken. Far too many workers did not receive overtime.
  • The exemption structure needed to be modernized.
  • There wasn’t clarity on who was exempt.

Under the existing regulations, the DOL estimates that 750,000 workers are misclassified. The employer community had been telling the Wage and Hour Division that figuring out who was exempt was “really complicated” and took “tons of time.”

The rule will reclassify 4.2 million workers as nonexempt—and eligible for overtime, Weil said. “Now more workers will have more money in their pockets,” he remarked.

‘Myths’ About the Rule

Weil disagreed with the assertion that the rule would hurt the people it was trying to help. “I don’t get that notion,” he said, calling the rule changes “long overdue” and saying that the rule gives employers many options to comply.

Opponents of the rule say it will be difficult to track time worked. Weil scoffed at that claim, saying the criticism came from lawyers who bill in “6-minute increments.”

As for the fear that reclassified workers would consider the change to be a demotion, Weil said, “Come on.” He suggested that what’s more important is how employees are treated in the workforce. He also said that in all of his conversations with workers that he did not hear a single one say, “Gee, I’d rather have recognition than additional income.”

The claim that the rule will result in more litigation is a “big head-scratcher,” Weil said. He predicted less litigation in the future as the rule will provide a “brighter line based on the salary threshold.”

For all of the Wage and Hour Division’s outreach efforts, however, Weil indicated that the division is strong on enforcement, noting that since 2009 it has collected $1.6 billion in back wages on behalf of 1.7 million workers.

Nevertheless, he emphasized the division’s education efforts, encouraging attendees to find out who is responsible for the agency’s outreach in their region to foster greater compliance.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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