Department of Labor Seeks Input on Federal Overtime Exemptions

Jul 25 2017 - Overtime - Gail Cecchettini Whaley

The DOL starts over on federal overtime rule; input requested.

The DOL starts over on federal overtime rule; input requested.

Today, the U.S. Department of Labor (DOL) announced that it will publish a Request for Information (RFI) relating to the federal overtime rule, which defines who is exempt from minimum wage and overtime requirements under the Fair Labor and Standards Act (FLSA).

Last year, the previous administration issued an overtime rule that would have set a new federal salary threshold that must be met before an executive, professional or administrative employee can be exempt from overtime. Employers challenged the new salary threshold of $47,476 a year ($913 a week), which was more than double the existing federal salary test and also higher than California’s minimum salary test. This rule was set to go into effect in December of last year. However, legal challenges placed the rule on hold and the new administration indicated that it would look into the overtime rule.

Now, the DOL has issued an RFI to gather more public input on the overtime rule and to aid the department in formulating a proposal to revise these rules. A preview copy of the RFI can be found here.

The RFI solicits feedback on questions related to:

  • The salary level test;
  • The duties test;
  • Inclusion of non-discretionary bonuses and incentive payments to satisfy a portion of the salary level;
  • The salary test for highly compensated employees; and
  • Automatic updating of the salary level tests.

The wording of the questions in the RFI suggests that the DOL may be considering several ideas for revising the federal overtime rule, such as:

  • Updating the existing salary level of $455 a week for inflation;
  • Using multiple salary levels, perhaps based on employer size or geographical location and cost of living in different parts of the U.S; or
  • Eliminating the salary test all together and just relying on a duties test.

The RFI also seeks information on how the 2016 rule announcement affected employers. The 2016 rule was stopped about a week before it was supposed to be implemented. Many employers already had raised salaries or taken other steps to prepare for the implementation of the rule. The DOL seeks to learn what changes employers made (adjusting salaries, reducing hours) and the economic and non-economic impact of those changes.

The 60-day comment period for all issues raised in the RFI ends on September 25, 2017. Instructions for submitting comments are available at www.regulations.gov. The DOL is encouraging electronic submission of comments. Comments should reference the Regulatory Information Number (RIN) 1235-AA20.

Keep Following the California Test

While the federal government continues to tinker with the federal overtime rule, California employers should continue to follow the California salary test to determine whether an employee can be classified as exempt under the executive, administrative and professional exemptions. In addition to the salary test, California employees must meet a strict duties test to be classified as exempt.

Stay tuned for more updates on this issue.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

CalChamber members can use the Exempt/Nonexempt Wizard to help determine if a job position should be classified as exempt or nonexempt as well as read the Determining Exempt and Nonexempt Employee Status in the HR Library. Not a member? See how CalChamber can help you.

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