FLSA Update

DOL Issues Its Long-Awaited Overtime Proposal

Jul 10, 2015
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On June 30, the U.S. Department of Labor (DOL) announced proposed changes to the part 541 Fair Labor Standards Act (FLSA) regulations governing overtime determination and coverage. While it was anticipated that the DOL would increase the minimum salary level, which has been set at $455 per week since 2004, it was not clear what salary level the department would choose or how quickly it would be implemented. In addition, there was an expectation that changes would also be proposed to the duties test portion of the 541 FLSA regulation.

Under the proposal, the salary level would be set equal to the 40th percentile of earnings for full-time salaried employees—this is estimated to be $970 per week in 2016. The proposal also raises the highly compensated salary to the 90th percentile of earnings for full-time salaried employees, or $122,148 annually. For the first time, DOL is proposing to include a mechanism to automatically update the salary level on an annual basis. DOL is seeking input on whether to use a fixed percentage of wages such as the 40th percentile of earnings or to base the annual increase to the salary level on the Consumer Price Index for All Urban Consumers (CPI-U), a measure that calculates inflation by measuring the average change over time in the prices paid by urban consumers.

In an unexpected move, the DOL did not suggest specific modifications to the 541 FLSA duites test. Instead, the proposed regulation asks a series of questions seeking input on whether changes are needed to the duties test and if so, what changes should be made. The department also seeks input on what types of examples to provide in the final regulation to illustrate how the exemptions may apply to specific jobs.

The proposed rule was published in the Federal Register on July 6, and comments are due to the DOL on or before September 4, 2015. Several stakeholders, including SHRM, are asking for additional time in order to gather member input and provide comprehensive comments on the proposal. We don’t yet know whether an extension to the comment period will be granted. In the meantime, SHRM is moving full steam ahead in making sure our members are well-briefed about the potential implications of the rule, and how they can best participate in the regulatory process in the coming months.

To provide HR professionals with immediate and timely information on this newly proposed rule, SHRM hosted a webcast on July 9 dedicated to these changes to the DOL’s overtime rules. Presenters Michael Eastman, of Norris, Tysse, Lampley & Lakis LLP, and Nancy Hammer, of SHRM’s Government Affairs team, gave special insight into the proposed changes, the potential impact on the HR profession, and how HR professionals can best be involved in this process. Members may access an archived version of the webcast HERE.

In addition, SHRM has created a special section in its HR Policy Action Center dedicated to content and advocacy efforts surrounding these changes to overtime regulations. Visit http://www.advocacy.shrm.org/overtime to review background on this issue, to read SHRM’s “8 Things to Know About Newly Proposed Overtime Regulations,” to participate in the “Share Your Story” feature about the impact the new proposed overtime rules could have on employers and employees, and to stay informed about how to raise your HR voice in the coming months as this regulatory issue develops.

Want to stay up-to-date on the latest news and calls to action surrounding the overtime regulation rule process? Join SHRM’s A-Team to serve as an advocate for the profession on this and other workplace issues of the day. Also, be sure to download SHRM’s mobile advocacy app (“SHRM Advocacy,” free in app stores), and follow @SHRMATeam and #overtime on Twitter to receive breaking overtime regulation updates in the weeks and months ahead.

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