On March 15, 2016, the U.S. Department of Labor (“DOL”) sent the White House’s Office of Management and Budget (“OMB”) its final rule expanding the Fair Labor Standards Act’s (“FLSA”) overtime pay requirement.
If you haven’t already heard, this rule will raise the threshold required to qualify for the FLSA’s “white collar” exemption to an estimated $50,440 per year, which is more than double the current threshold of $23,660 or less per year. The DOL expects this change to affect roughly 5 million U.S. workers. For a full rundown of the details and implications of the new rule, see our previous post here.
Of course, this rule is not free of controversy, and concerns about the impact of the new rule have been brought forward by numerous commentators and legislators. On March 16, 2016, several lawmakers raised concerns about the new rule during DOL Secretary Thomas Perez’s testimony before the Committee on Education and the Workforce. Such concerns include the impact of the new rule, including that it would eliminate flexibility enjoyed by many managerial employees and adversely affect small businesses. This continued pushback from businesses and lawmakers is likely what drove the DOL to deliver the rule to the OMB quickly, in the hope that the rule can be published and President Obama can veto any possible resolution that Congress may pass under the Congressional Review Act before his term expires.
The rule may become official as early as May or June of 2016, about a year after it was first introduced in June 2015. The rule will go into effect 60 days after its publication.
So, if you haven’t already, now is the time to review your employee classifications!