Update on the Overtime Law

Remember the new overtime regulations that were supposed to take effect on Dec 1, 2016? Remember all the headaches you went through last Fall trying to figure out the best way to handle those exempt employees who made less than the proposed new threshold? Remember how it all seemed to just go away but can't remember why and where things stand? Here's a reminder of what happened and an update on where things are today:

Just before Thanksgiving a Federal Judge in Texas issued an injunction to pause the new rules from going into effect on Dec. 1. In one of its last acts under the Obama administration, The Department of Labor appealed that injunction. The DOL, now under the new Trump administration, dragged its feet on that appeal while waiting to get the new Secretary of Labor confirmed and new top administrators in place. Finally, on June 30, the DOL officially dropped the appeal, as expected.  So this means the changes are dead, right?

Not so fast!  The DOL also submitted a formal Request for Information to another agency in late June signaling that the new administration and Secretary Acosta might still be considering changes. While no one expects the new salary test thresholds to be as high as the $47,476 proposed by the Obama team, even many conservatives agree that the current threshold of $23,660 is too low. 

Duties test?  To be compliant with the Fair Labor Standards Act, employers must consider both the salary test and the duties test in determining whether an employee is eligible to be classified as exempt (salaried). All the hoopla in 2016 was related to proposed changes in the salary test - but no changes were proposed for the duties test. The salary test has always been the easy part of the FLSA to understand and be in compliance with. The duties tests have always been where the gray areas are and where confusion lies. The Society of Human Resource Management (SHRM) and other lobbying groups have repeatedly asked the Department of Labor to review the duties tests.

Hopefully this Request for Information is the beginning of a process that will lead to a meaningful review of both the salary test AND the duties test this time around! Stay tuned to this blog for updates as they happen.

In the meantime, just because some of your employees meet the old salary test doesn't mean that a wage and hour division auditor would agree that they are exempt. We always recommend reviewing the duties test requirements that apply to each of your exempt positions to ensure that your exempt employee meets both standards.