Proposed Overtime Rule Now Projected to Come Out in Fall

Allen Smith, J.D. By Allen Smith, J.D. June 23, 2022
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​With the issuance of its spring regulatory agenda on June 21, the U.S. Department of Labor (DOL) announced that its proposed overtime rule is now tentatively slated to be released in October.

Once anticipated in the spring, the proposed rule will recommend how to implement the exemption of bona fide executive, administrative and professional employees from the Fair Labor Standards Act's (FLSA's) minimum wage and overtime requirements.

High on the DOL's list of priorities with the proposed overtime rule will be adjusting the salary level, possibly increasing it from its current annualized rate of $35,568, noted Robert Boonin, an attorney with Dykema in Ann Arbor, Mich. "There's certainly pressure to bring the amount to as high as the $47,476 annualized amount that was enjoined by a court in 2016, but many advocates are seeking even higher levels, from $62,000 to over $80,000 per year," he said.

Another item on the list of DOL priorities may be the creation of an automatic annual or periodic increase to the salary level by indexing it to the consumer price index or another economic indicator so that the amount will increase without the DOL having to undertake formal rulemaking.

One other item that may be in play is the duties test, Boonin added. The DOL has considered modifying the regulations in this regard a few times in recent years but has ended up leaving the current tests alone.

"Some commentators, though, believe that the administration may go the distance this time and look toward conforming the federal rules to more closely reflect the California standards," he said. The California standards require that more than 50 percent of the employee's time be spent solely on performing exempt duties in order to be classified as exempt, he noted. 

"This type of change would also disqualify many currently exempt employees from their current exempt status," he said. "If any of these issues make their way into new regulations in any significant way, litigation is assured."

Lee Schreter, an attorney with Littler in Atlanta, said she wouldn't be surprised if the DOL tightens up the administrative exemption. There are some in the department who believe that in order to be eligible for the exemption, an employee shouldn't be involved in any type of selling, she said.

While employers should be monitoring these potential changes, the regulatory process is still in the early stages, said Jim Plunkett, an attorney with Ogletree Deakins in Washington, D.C.  

"At this time, stakeholders do not even know what changes the DOL will propose, much less finalize," he said. "Thus, it is premature to make internal changes to pay policies in anticipation of the rulemaking. Many in the business community believe that current hiring and retention issues, supply chain disruptions, and inflationary pressures are all reasons why the DOL should not proceed with a rulemaking."

Other DOL Action

The DOL noted in its agenda that the Occupational Safety and Health Administration (OSHA) has already issued an emergency temporary standard to address the danger of COVID-19 in health care workplaces. The department said in the regulatory agenda that "the danger faced by health care workers continues to be of the highest concern and measures to prevent the spread of COVID-19 are still needed to protect them." OSHA aims to complete a final rule by September.

A Davis-Bacon Act final rule is now scheduled for December.

A final rule on improving tracking of workplace injuries and illnesses is slated for December, as well.

Notably absent from the spring regulatory agenda is an entry for an FLSA independent-contractor rulemaking, given that a recent blog post on the DOL's website stated that such a proposal is in the works, Plunkett said.

However, Schreter said, "I don't think they're going to give up on that."

DHS Regulatory Action

In the spring regulatory agenda, the U.S. Department of Homeland Security (DHS) announced that it plans to issue a final rule on Deferred Action for Childhood Arrivals (DACA) in August.

On June 15, 2012, the DHS established the DACA policy. The policy directed U.S. Citizenship and Immigration Services (USCIS) to create a process to defer the removal of certain noncitizens who years earlier came to the United States as children, meet other criteria and do not present other circumstances that would warrant removal, according to the DHS.

President Joe Biden directed the DHS on Jan. 20, 2021, to take all appropriate actions to preserve and strengthen DACA, consistent with applicable law. On July 16, 2021, the U.S. District Court for the Southern District of Texas vacated the June 2012 memorandum that created the DACA policy and permanently blocked the DHS from administering the DACA program and from reimplementing DACA without compliance with the Administrative Procedure Act.

However, the district court temporarily stayed its order with respect to most individuals granted deferred action under the DACA policy on or before July 16, 2021, including with respect to their renewal requests. The district court did this partly based on its conclusion that the June 2012 memorandum announced a legislative rule that required notice-and-comment rulemaking. The district court further sent the DACA policy to the DHS for further consideration.

The DHS has appealed the district court's decision. Consistent with the presidential memorandum, the DHS published a notice of proposed rulemaking on Sept. 28, 2021, to consider all issues regarding DACA, including those identified by the district court relating to the policy's substantive legality.

NLRB Agenda

The National Labor Relations Board (NLRB) indicated in the spring regulatory agenda its intention to consider addressing the following topics using the rulemaking process in the future:

  • Joint-employer status under the National Labor Relations Act.
  • Procedures governing "blocking charges."
  • Procedures on voluntary recognition of unions.

The board announced it would be revising the union representation election procedures with a focus on the amendments issued in 2020.

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