Final "White Collar" Overtime Regulations Expected Soon

The final rule for the new "white collar" overtime regulations from the U.S. Department of Labor (“DOL”) is likely to be published in spring or summer of 2016.

 

As we previously reported, the DOL issued proposed regulations in July 2015 announcing significant changes to the law governing certain “white collar” workers who are exempt from minimum wage and overtime pay.  The DOL’s proposed regulations more than double the current minimum salary level for exempt employees, significantly increase the salary level required for employees to be exempt from overtime as highly compensated employees, and automatically adjust the minimum salary level each year to account for the increase in the cost of living.  

The DOL’s Fall 2015 Semiannual Regulatory Agenda indicates that the timetable for publishing the final rule is July 2016.  However, there is reason to think that the final rule might come sooner.  In an interview with Bloomberg BNA on December 16, 2015, Labor Secretary Thomas Perez stated, “I'm confident we’ll get the final rule out by the spring of next year.” 

The final rule is expected to increase the minimum salary level for "white collar" exempt employees, and to add a mechanism for an automatic annual increase of that minimum level.  It is expected that fewer employees will meet the requirements to be exempt from overtime, and thus either will be entitled to receive overtime pay, or will have to receive a higher salary in order to remain exempt under the FLSA. 

Labor Day Hot Topics

Happy Labor Day 2015!  In the spirit of the day, we thought it fitting to reflect on the three, hot topics that have been dominating the labor and employment news this summer, and which are certain to impact employers and employees in 2016. 
 

1. Revision to FLSA's "White Collar" Regulations. In summary, these proposed amendments to the Fair Labor Standards Act regulations more than double the minimum salary level (from $23,660 to over $50,000 per year in 2016) for certain employees deemed to be exempt from overtime as administrative workers, executives, professionals, and computer employees.  The amendments also increase the minimum pay level necessary to be deemed an exempt "Highly Compensated Employee" from the current $100,000 to $122,148 per year. These proposed regulations are a compliance and budgeting issue for many businesses. Barring some unexpected event, the regulations are likely to become effective in 2016. 
2. New DOL Guidance on Contractor Misclassification. The U.S. Department of Labor issued a new administrative interpretation for the legal test of whether a worker is an independent contractor or an employee.  The bottom line is that under the new interpretation, it will be more difficult than ever to properly classify a worker as a contractor.  This new guidance has significant implications for businesses who rely on contract labor, as there are substantial tax, wage and hour, and benefits consequences for misclassification.
3. Expansion of NLRB's Test for "Joint Employment." The National Labor Relations Board (NLRB) announced in an August 27, 2015 decision that it was changing the test to determine whether two related businesses are "joint employers." In sum, the federal position announced in the NLRB decision is that many more businesses, like franchisors-franchisees, manufacturers-distributors, and staffing agencies and their clients can be held jointly liable for employment claims (wage and hour violations, discrimination and harassment, etc.) and could more easily organized by labor unions. This new legal test will be a major change for many businesses if it survives the expected court challenge. 

We will be watching these changes in the law closely in the coming months as businesses begin making adjustments to comply with them and to mitigate their legal risks.

Womble Carlyle Launches Resource Page for Proposed Rules on "White Collar" Exemptions

Updated, September 19, 2017:  Due to the 2016 regulations being struck down by a federal court, we have removed the Resource Page as no longer relevant or accurate.


The last week of February is upon us, and the Department of Labor has not yet issued the highly anticipated new FLSA regulations which will propose changes to the white collar exemptions.  Announced by President Obama nearly a year ago, the proposed rules (which have already been postponed once) are currently scheduled for release sometime this month.  If the FLSA proposed rules become law, they are expected to dramatically change which employees can be classified as exempt, which in turn may significantly impact wages and overtime pay to workers.

Womble Carlyle is pleased to announce a Resource Page to help businesses prepare for these proposed rules, which will be the most significant change to the FLSA in more than a decade.  The Resource Page provides businesses with the latest information and updates on these proposed rules, including background information and references to key materials. 

The Resource Page can found here.

When the proposed rules are finally released, we look forward to offering our analysis and practical recommendations to assist businesses with understanding the proposed rules, and meeting the expected compliance challenges if the proposed rules become law.

Because you are asking . . . DOL Says New Proposed Rule On White Collar Exemptions Under The FLSA Will Be Issued In February 2015

As many of you know, last year President Obama directed the DOL to issue new regulations to “modernize and streamline” the white collar exemptions to the minimum wage and overtime requirements under the FLSA.  (Keep in mind that under federal rulemaking procedures, the DOL will first issue a “Notice of Proposed Rulemaking” and allow a period of public comment before issuing a final rule.)  We have been waiting for the proposed rule so that we can see what changes the DOL has in mind for these key provisions of the FLSA, which are expected to revise the current regulations for the executive, administrative, and professional exemptions.

Initially, the DOL said the proposed rules would be issued last Fall, but the DOL later announced the notice would be delayed.  Currently, the DOL’s expected release date is sometime in February 2015, according to a notice from the Office of Management and Budget.  Like you, we will be watching closely for these highly anticipated rules which (if finalized) are likely to significantly impact workers and businesses.