Regulatory Update

Comprehensive Changes to Overtime White-Collar Exemptions Imminent

May 22, 2015
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The Office of Management and Budget (OMB) has been reviewing the U.S. Department of Labor’s (DOL’s) proposed changes to the Fair Labor Standards Act’s (FLSA’s) overtime regulations since May 5, 2015. Once OMB finalizes its review, which could happen at any time, a proposed rule will be made public and available for review and comment.

While the details of the FLSA proposal are not public, the Obama administration is expected to make changes to the salary basis level. Currently set at $455 per week, the salary level under the proposed rule is likely to be raised substantially, possibly to between $655 and $1,000 a week according to recent news reports. In addition, the rule is expected to change the duties test, possibly implementing a California-style requirement that otherwise exempt employees may spend no more than 50 percent of their time performing non-exempt work or run the risk of being reclassified as non-exempt – thus making them eligible for overtime.

SHRM is very concerned about the impact that changes to the overtime regulations will have on employers and employees in organizations across the country. It is clear that any new rules in this area will result in dramatic changes for workplace and compensation structures.

Your HR voice will be needed to effectively communicate the HR profession’s concerns to DOL. SHRM is planning a robust advocacy strategy during the comment phase of this effort, providing SHRM state councils and chapters with the opportunity to sign onto its comments and providing sample language to individual SHRM members to submit comments to the agency. SHRM has already engaged its Advocacy Team (the A-Team) and have been gathering input from SHRM members on the FLSA regulations overtime issue. We invite SHRM members with specific interest and experience with the overtime rules to e-mail to be included on this list of members to contact as the need for information arises.

When DOL last updated the overtime regulations in 2004, the agency received over 75,000 comments to the proposed regulations and spent 13 months reviewing them before publishing the final rule. It is important to provide DOL with robust input on this proposal so that the agency fully understands the impact on employers and employees.

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