Answering President Obama’s March 13, 2014 call to “modernize” and streamline” overtime regulations under the Fair Labor Standards Act (“FLSA”), the Department of Labor (“DOL”) submitted its proposed revisions of the overtime rules to the Office of Management and Budget (“OMB”).
After a year of anticipation, Secretary of Labor Thomas Perez announced the news on the DOL’s blog, noting that the focus on updating the FLSA’s overtime protections is aimed at “making sure that millions of workers are paid fairly for a long, hard day’s work.” Though the proposed rule has not been made public, it likely will address the regulations providing for exemptions from the FLSA’s overtime requirements for “executive, administrative and professional employees” commonly referred to as the “white collar” exemptions. As the President’s 2014 memorandum had highlighted the outdated nature of the current $455 salary threshold required to satisfy these “white collar” exemptions, the proposed rule is expected to increase this threshold, which was last raised by the DOL back in 2004. By increasing the weekly salary threshold, the classes of employees who qualify for the overtime exemptions would be effectively narrowed, thereby requiring employers to pay overtime to larger segments of their workforces, including employees previously considered exempt. We also anticipate that changes will be made to the “duties” aspect of the white collar exemption test, perhaps in a manner that specifies a percentage of time that employees must spend performing exempt duties.
Following review by the OMB’s Office of Information and Regulatory Affairs (“OIRA”), the proposed rule must be published in the Federal Register and open for public comment before the DOL can issue a final rule. Though Secretary Perez stated that the public “will have an opportunity to weigh in” sometime in the “near future,” no timeline for the final rule has been established. Under Executive Order 12,866 the OMB has ninety days to review the proposed rule, but this deadline may be extended. We will continue to update you on important developments regarding the overtime standards.