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USDOL Overtime Rule Update

Remember the scramble two years ago to prepare for the new federal overtime rule that would have increased the salary threshold level for “white-collar” exemptions from $23,660 to $47,476, only to have a federal district court judge in Texas issue an injunction preventing the USDOL from implementing and enforcing the rule just days before it was set to go into effect? Here is a quick summary of what has been happening on this issue since that November 2016 injunction.

One thing that happened is that we have had a change in administration on the federal level. Though the USDOL appealed the later decision by the same Texas federal district court judge declaring that that the 2016 rule’s salary level exceeded the USDOL’s authority and is invalid, the appeal has been stayed at the request of the USDOL while the new administration engages in rulemaking to revise the overtime rule.

In July 2017, the USDOL published a Request for Information (RFI) on “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees.”  The USDOL received 24,000 comments in response to the RFI.

After receiving the RFI comments, the USDOL conducted “Overtime Rule Listening Sessions” in six cities around the country to gain input and opinion from various stakeholders. The USDOL conducted the last of those listening sessions on October 17, 2018.  The USDOL has now indicated its intent to issue a Notice of Proposed Rulemaking in March 2019, which will trigger another public comment period. Given the number of comments received in connection with the 2016 rulemaking and the 2017 RFI, we would expect that the USDOL will have a fair amount of review work before it issues another overtime rule. With a Notice of Proposed Rulemaking scheduled for March 2019, it will likely be late in 2019 that a new final rule will be promulgated and could be 2020 before compliance with the final rule will be required. We will see.

The current $23,660 salary threshold for exemption has been in place since 2004 and it will almost certainly be adjusted upward. Crystal ball commentators are suggesting an adjustment of the salary level to the low or mid $30,000s. Other commentators are suggesting that, even though the USDOL listening sessions were focused on salary level issues, the USDOL may take the opportunity to update the “duties” tests under the FLSA. At this point we do not know.

Change is coming, but there is not much that can be done at this point to prepare without having more specific information on what the new salary levels for exemption will be.  The best advice for now is to stay tuned and try to keep abreast of developments in the USDOL rulemaking process and be aware that salary increases may be required in the next year or so for certain employees in order to maintain their exempt status.