In March of last year, President Obama instructed the Department of Labor (“DOL”) to update and modernize the overtime exemptions to the Fair Labor Standards Act (“FLSA”), with the goal of extending overtime pay to many of the employees exempt from overtime requirements under current FLSA regulations. Previously, the DOL stated that it would issue proposed revisions by February of 2015 and since that deadline passed without issuance of the updated regulations, employers have been waiting for word on a revised issuance date.
That word came on May 5, 2015, when the DOL sent its proposed overtime rules to the White House Office of Management and Budget (“OMB”), which is the final step before the proposed rules can be published and the public comment period can begin. In his blog, the Secretary of the DOL stated: “We’ve worked diligently over the last year to develop a proposed rule that answers the president’s directive and captures input from a diverse range of stakeholders. . . . In the near future, the public will have an opportunity to weigh in and help us craft a final rule.” The OMB generally reviews such proposed rules within 90 days.
Details of the DOL’s proposal have not been made public. However, it is expected that the new rules will include a significant increase in the minimum salary required for an employee to qualify as exempt from overtime — up from the current minimum of $23,660 to potentially $50,000 or higher. The DOL is also likely to revise the duties tests to make it harder for employers to classify employees as exempt, by for example limiting a manager’s ability to perform management and non-exempt work concurrently.
Quarles & Brady will continue to monitor these important developments and provide further notice once the proposed regulations are issued and open for public comment. Employers should keep abreast of these developments and consider submitting comments after the DOL issues its proposed rules, as well as consider taking steps now to identify positions likely to be impacted by the new regulations.