DOL Requests Information Regarding Overtime ExemptionsAugust 2, 2017
On July 26, 2017, the Wage and Hour Division of the Department of Labor (DOL) published a Request for Information (RFI) regarding overtime regulations under the Fair Labor Standards Act (FLSA).
The DOL invites comments on the 2016 revisions to the “white collar” exemption in the FLSA, including whether the standard salary level set effectively identifies the employees who should be exempt, or whether there should be a different methodology utilized to set the standard salary threshold. DOL also seeks feedback on whether small entities encountered any unique challenges posed by this rule, and if they faced any economic and non-economic impacts.
Under the FLSA, most workers are entitled to minimum wage and overtime pay for hours worked over 40 hours. However, there is a “white collar” exemption in the FLSA for certain executive, administrative, professional, outside sales and computer employees; qualifying for this exemption requires that these employees earn no less than a standard salary threshold and other criteria.
In May 2016, the DOL finalized a rule that changes the standard salary threshold for this exemption, from $23,660 to $47,476—for all salaried employees below that amount will qualify for time-and-a-half pay if they work more than 40 hours in any given week. This is lower than the $50,440 threshold in the proposed rule released in July 2015, however, this new amount is almost double the current threshold of $23,660. In November 2016, the rule was enjoined by a federal court before it became effective.
When first proposed, NSBA submitted comments and among the key issues raised by NSBA’s comments were: the cost of compliance for small businesses will be much greater than the DOL estimate; changes to the duties test are likely to miss the fact that there is no bright line between “exempt” and “non-exempt” in the typical small business workplace; the creation of new hourly reporting and tracking requirements are likely to be a disproportionate burden on smaller firms; the rule could force struggling small firms to reduce employee hours; and employee morale will take a significant hit where employees must be “downgraded” from exempt managers to non-exempt workers.