Authored by Alex Passantino

Over the past several weeks, we have received an increasing number of questions about the status of the Department of Labor’s revisions to the “white collar” overtime exemptions.  As regular readers know, last March, the President directed the Secretary of Labor to begin the regulatory process on those regulations.  At that time, the President directed the Secretary to consider how the regulations could be revised to:

  • Update existing protections in keeping with the intention of the Fair Labor Standards Act.
  • Address the changing nature of the American workplace.
  • Simplify the overtime rules to make them easier for both workers and businesses to understand and apply.

Since the initial direction by the President, indications are that the anticipated revisions to the overtime regulations may involve:

  • A (potentially significant) increase to the current salary level of $455 per week.
  • An adjustment to the primary duty test, presumably to implement a California-style hard 50% limitation on work deemed non-exempt, although a different—and more workable—standard (e.g., 30%, 40%) is certainly possible.
  • And other changes to the duties tests, such as limitation or elimination on the ability of managers to engage in management and non-exempt work concurrently or the re-introduction of the requirement that an administrative employee’s work be related to management “policies.

The details of the proposed revisions, however, remain in the Department of Labor.

In May of last year, the Department of Labor identified a target date of November 2014 for publication of a proposed rule.  In the months that followed, the Department engaged in a series of “listening sessions” with the regulated community, soliciting input and ideas.  The Department, however, did not meet its November target date.

In December, the Department identified a target date of February.  As of this post, the proposed rule has not yet been submitted to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA).  Given that OIRA can sometimes take months to review a rule, it is difficult to see how the Department can meet its February date, but there has been no formal announcement of a delay.

There has, however, been much speculation about what may be holding the regulations up at the Department.  That speculation typically focuses on the proper salary level for the exemption.  Earlier this month, the Economic Policy Institute, a think-tank that receives a significant portion of funding from organized labor, posted a letter sent by a number of labor economists to Secretary Perez.  In that letter, the economists noted that the Department had been considering a salary level of $42,000.  The economists pushed for a $50,000 threshold.

The U.S. Senate also jumped into the salary level debate today, when a group of 25 Democratic Senators (as well as Sen. Bernie Sanders, an Independent who caucuses with the Democrats) sent a letter to President Obama requesting that the salary level be increased to at least $56,680 per year.

Clearly, the proper salary level to be included in the proposal is something under careful consideration at the Department.  Presumably, once that level is determined, the proposed regulations will be sent to OIRA, and, ultimately, published in the Federal Register for comment by the regulated community.  Only after that notice, comment, consideration—and, presumably, another long debate surrounding the salary level—will any changes become applicable to the U.S. workforce.

We will keep you updated on further developments as they arise.