Tag Archives: overtime

Once More, With Feeling: Proposed Increase to Minimum Salary for Highly Compensated Employees

As previously reported, the U.S. Department of Labor issued a proposed rule addressing exemptions for bona fide executive, administrative, professional, and outside sales employees (the “white-collar” exemptions”) under the Fair Labor Standards Act. Presuming the rule goes into effect, the new minimum salary threshold for these employees will be $35,308 per year (or $679 per week).

Beyond changing the minimum salary threshold for the “white-collar” exempt employees, the DOL also proposed increasing the exemption threshold for a smaller category of employees: “highly-compensated” employees. Previously, any employee whose primary duty was performing office or non-manual work and who customarily and regularly performed at least one duty or had at least responsibility of a bona fide executive, administrative, or professional employee could be exempt–if the employee made at least $100,000 a year and received at least $455 each week on a salary or fee basis. In essence, the “highly-compensated” employees exemption combines a high compensation requirement with a less-stringent, more-flexible duties test in comparison to those used under the “white-collar” exemptions.

Like the DOL’s proposed changes to the “white-collar” exemption, the DOL’s proposed changes to the “highly-compensated” exemption does not alter the duties requirements. Rather, the DOL proposes an increase to the annual and weekly salary thresholds. But in this instance, the increase is substantial. The proposed new threshold jumps from $100,000 under the current rules up to $147,414, of which $679 must be paid weekly on a salary or fee basis. That is an approximate 50 percent increase, and it is about $13,000 higher than what had been previously proposed when changes were considered in 2016.

Now, despite the change raising eyebrows, one could question whether it would have significant impacts because most workers paid $100,000 or more often already fall into one or more of the other exemptions. The DOL itself acknowledges in the proposed rulemaking that it estimates only about 201,100 workers nationwide would become eligible for overtime due to this salary increase. In comparison, the DOL expects the “white-collar” salary change will impact approximately 1.1 million workers nationwide.

The common view remains that the new minimum salary thresholds will likely go into place later this year (2019) but likely no later than January 1, 2020. Although that later date is almost seven months away, that deadline is rapidly approaching. Hence, it is worth reiterating that employers should begin evaluating their staff to determine who, if anyone, may be affected and determine how to proceed. Similarly, this rule change provides employers an opportunity to audit all of their employees (even those unaffected by the proposed rule changes) to make sure each one is properly classified. And if they are not, employers can time any reclassifications with those made to meet the new rule changes to possibly minimize bringing attention to and potential liability for any past misclassifications.

In the meantime, the DOL will accept comments from interested parties until May 21, 2019 at 11:59 PM ET. The public will be able to provide electronic comments at regulations.gov (after searching for RIN no. 1235-AA20) or via mail to the address below (identifying in the written comment (1) the Wage and Hour Division, United States Department of Labor; and (2) RIN no. 1235-AA20).

Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, D.C. 20210

John C. Getty
jgetty@williamsparker.com
(941) 329-6622

Let’s Try this Again: Department of Labor Proposes Salary Increases for White-Collar Exemptions

Please note: This post has been updated to reflect a corrected annual minimum salary threshold of $35,308 which represents a nearly $12,000 per year increase from the current salary requirement of $23,660.

The U.S. Department of Labor issued a much-anticipated proposed rule addressing the “white-collar” exemptions for the Fair Labor Standards Act. If the proposed rule is enacted later this year, the new minimum salary threshold will be $35,308 per year (or $679 per week). This represents nearly a $12,000 per year increase from the current salary requirement of $23,660 (or $455 per week). Thus, once this new rule goes into effect, for an employee to be exempt from the FLSA’s minimum wage and overtime rules, the employee’s salary will need to meet the new threshold.

Importantly though, the DOL will not be altering any other aspects of the “white-collar” exemption tests. It won’t be changing the various tests for executives, administrative staff, or professionals. Nor does the DOL’s new rule include periodic automatic increases to the minimum salary threshold as the Obama-era DOL had proposed before a district court stopped it in 2016.

Depending on how quickly the DOL moves through the rule-making process and issues the new rule, the new minimum salary threshold will likely go into place late summer or early fall of this year. For that reason, as they did in 2016 in response to the prior proposed increases, employers will want to begin evaluating their staff to determine who may be affected and determine how they want to proceed.  Additionally, because of this rule change, employers will also want to audit all of their employees to make sure each one is properly classified, and if not, take this opportunity to reclassify employees in a manner that tries to minimize liability for any past misclassifications.

John Getty
jgetty@williamsparker.com
(941) 329-6622

Business Resolutions: Ensuring Your Business Starts the New Year Off Right

When was the last time that your business had a wage audit to evaluate whether your employees are properly classified under the Fair Labor Standards Act, or had your employee handbook reviewed and revised to bring it up-to-date with the law and current company practices? If it has been a few years, then this may be the year that your business resolves to invest in a wage audit and/or handbook review.

Wage audits include an evaluation of your job positions, pay and overtime policies, as well as payroll records of each position within an organization or department. Sometimes, audits can also include interviews with employees to ascertain if there are any issues that management should be aware of. Audits can reveal if a business has any issues with, not only misclassification of employees as exempt when they should be non-exempt, but whether managers are following the organization’s policies regarding overtime. As a company grows and changes, often the duties of its employees also change. Sometimes these changes are significant enough that a change in classification is in order and a failure to adjust the classification could result in liability. Further, a wage audit can often help to determine if an organization’s accountant or payroll company is calculating overtime in accordance with the applicable regulations. Many a lawsuit are filed against employers who believe that since they have enlisted the assistance of a third party, employee overtime is being calculated appropriately. That is not always the case.

Employee handbooks should be reviewed every couple of years, not only to ensure that the handbook reflects the current state of the law, but also that it reflects the actual practices of a company. Businesses grow and change, and actual practices can start to diverge from what is reflected in the handbook. It is always better to have a handbook that provides policies and procedures that the company is currently using and enforcing. It is never recommended for a company to have policies that it does not follow.

This post is part of a series of business resolutions to consider for the new year. In case you missed them, our previous posts in the series discussed Florida minimum wage and employee performance management.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
(941) 552-2558

BREAKING NEWS: Overtime Rules Overruled

Employers, the wait is over. You finally have an answer regarding the 2016 overtime regulations. Yesterday afternoon, a Texas federal judge issued an order invalidating the U.S. Department of Labor’s overtime rules that had been set for implementation on December 1, 2016, but preliminarily stopped nationwide only days before by that same judge.

As noted in our earlier blog posts (“Breaking News: Federal Judge Halts Implementation of the DOL’s New Overtime Regulations” from November 23, 2016 and “2016 Overtime Regulations: They Are Still Out There” from June 13, 2017), the DOL had issued a final rule that was predicted to affect over 4.2 million workers, with Florida as the third most effected state. Those workers would no longer be exempt from overtime compensation due to increases in the minimum salary level for “white collar” exemptions from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) and highly compensated employees from $100,000 to $134,000 annually.

The DOL quickly appealed the preliminary injunction to the Fifth Circuit Court of Appeals, which left employers wondering whether the hold would be lifted by the appellate court or the appeal withdrawn. The uncertainty increased on July 25, 2017, when the DOL published a formal Request for Information so the DOL could issue a new proposal related to overtime regulations.

In the order, the court granted summary judgment to the business group and other plaintiffs who had challenged the new overtime rules and issued a final judgment on their behalf. The court held that the white collar exemptions were intended to apply to employees who perform “bona fide executive, administrative, or professional capacity” duties, and that the DOL does not have the authority to use a salary-level test that will effectively eliminate the duties test or exclude those who perform the duties based on salary level alone.  Because the new overtime rules would have “exclude[d] so many employees who perform exempt duties” and are “not based on a permissible construction of [the law]”, the DOL did not carry out Congress’s unambiguous intent, exceeded its authority, and has “gone too far” with the rules.  In sum, the overtime rules have been overruled, and may be disregarded by employers.

Read the full order here.

Gail E. Farb
gfarb@williamsparker.com
(941) 552-2557

2016 Overtime Regulations: They Are Still Out There

Like a science fiction television show from the 90s, the 2016 overtime regulations are still out there, as is the injunction preventing their implementation. To bring those that may just be returning from Close Encounters of the Third Kind up to date, in the latter part of 2016 employers rushed to get ready for December 1, 2016, the effective date for the regulations. On November 22, 2016, just days before the effective date and as employers scrambled to make their final preparations for the changes, a federal judge blocked the implementation. With the speed of Quicksilver, the Obama administration initiated an appeal. The Fifth Circuit Court of Appeals granted expedited review of the injunction, and many anticipated witnessing The War of the Worlds play out during oral argument. Then, as if a spacecraft had landed in Roswell and this time everyone stopped to watch the aliens disembark, the momentum came to a crashing halt just like a hirsute alien spacecraft piloted by Jeff Goldblum.

Shortly after President Trump took office, the U.S. Department of Labor (“DOL”) requested a postponement of its deadline to submit a reply brief. This request was granted. Just as that deadline was filed, the DOL again requested a postponement. Currently, the DOL’s reply brief is due on June 30, 2017. Although the new Administration could have withdrawn the appeal, it has not. Therefore, there still may be a chance for a strategic showdown such as that seen in Pixels.

Going into Overtime in the Search for a Secretary of Labor: What is Next for the 2016 Overtime Rule?

For weeks now, rumors have been circulating that the President’s nominee for Secretary of Labor, Andrew Puzder, would withdraw his name. As his confirmation hearing was delayed over and over again (five times), he repeatedly issued statements that he was fully committed to becoming Secretary of Labor and looking forward to his confirmation hearing. However, yesterday, on the eve of his scheduled appearance for questioning before the Senate Committee on Health, Education, Labor & Pensions, he issued a statement withdrawing his name for consideration.

As detailed in a previous blog post, Mr. Puzder is a fast-food executive who many believed would run the Department of Labor in a pro-business manner. Thus, labor organizations were greatly opposed to the President’s nominee and view his withdrawal as a win for workers.

This afternoon, it was announced that the President has selected former U.S. Attorney R. Alexander Acosta to serve as Secretary of Labor. Acosta is a former U.S. Attorney for the Southern District of Florida, a former member of the National Labor Relations Board, and a former assistant attorney general in the Department of Justice’s Civil Rights Division. He currently serves as the dean of Florida International University College of Law. Acosta has a very different background from the prior nominee.

If confirmed, it is not yet clear what approach Acosta will take in handing the pending appeal of the stay imposed on the 2016 overtime rules. The original briefing deadline on appeal was delayed as a result of the DOL’s request for additional time “to allow incoming leadership personnel adequate time to consider the issues.” The existing briefing deadline is currently March 2, 2017. It is possible that the administration will request additional time from the 5th Circuit Court of Appeals now that Puzder has withdrawn his name and Acosta is the new nominee. Oral argument has not been set.

Even though oral argument has not been set in the appeal, Washington is not taking a break from focusing on this issue. Today, a subcommittee of the House Education and the Workforce Committee is holding a hearing on “Federal Wage and Hour Policies in the Twenty-First Century Economy.” It is anticipated that the stayed overtime rule will take center stage at this hearing.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

BREAKING NEWS: Federal Judge Halts Implementation of the DOL’s New Overtime Regulations

On Tuesday evening, just days before the U.S. Department of Labor’s new overtime regulations were set to go into effect, a Texas federal judge blocked the December 1, 2016 implementation of the regulations, issuing a temporary injunction with nationwide applicability. The regulations blocked by this order not only provided for a substantial increase in the salary threshold required for the “white collar” exemptions, but also provided for automatic increases in the salary threshold every three years. The judge stated that, in drafting these rules, the DOL exceeded its authority and ignored congressional intent.

This order is not a final order, but merely a finding by the court that the plaintiffs have established they will likely succeed in their challenge to the rules. What happens next is yet to be determined. The DOL may appeal to the 5th Circuit Court of Appeals, Congress could pass one of the two pending bills drafted to alter the DOL’s regulations or draft a compromise bill, or the case is litigated absent a DOL appeal.  For now, the walk away for employers is that the rule will not take effect on December 1, 2016.

For employers that were not quite ready for the new rules, this decision will provide some additional time to evaluate and plan, just in case the temporary injunction is overturned. For employers that have already made changes to employees’ pay structures, there is no legal requirement or prohibition that such changes be maintained.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

A Challenge to the New Overtime Rules

On July 14, 2016, several house democrats, including Representative Gwen Graham from Florida, sponsored the Overtime Reform and Enhancement Act. The OREA (H.B. 5813) proposes to change the Department of Labor’s new overtime rules in two significant ways. First, the OREA would provide a gradual schedule to increase the minimum salary required to meet the salary basis test for purposes of determining whether an employee is exempt from overtime. Second, the OREA would eliminate one of the more controversial aspects of the DOL’s new rules, the automatic three-year increase to the salary threshold. The OREA was read twice and then referred to the House Education and the Workforce Committee. The OREA is supported by the US Chamber of Commerce and the Society for Human Resource Management, and opposed by the AFL-CIO.

See a summary of the proposed changes here:  http://schrader.house.gov/overtime/

For a list of members of the Education and Workforce Committee (there are two Florida members), see http://www.house.gov/representatives/#state_fl. Phone numbers of Florida’s Representatives can be found here: http://www.house.gov/representatives/#state_fl

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

New Overtime Regulations are Anticipated to Have the Greatest Impact in California, Texas, and Florida

The day before the final rules extending overtime protections to 4.2 million workers were released, the White House provided its state-by-state and demographic breakdowns of the workers that as of December 1, 2016, will no longer qualify as exempt employees. It is not surprising that Florida was identified as one of the top three states, behind California and Texas, in terms of the percentage of total workers that are anticipated to be affected by the new rules. By percentage, the largest impact of the new rules will be on workers between the ages of 25-34, and those workers that have a bachelor’s degree. When considering not only those that have attained a bachelor’s degree, but also those that have some college, or an associate/occupational degree, that group will constitute 67.8% of the total affected workers.  Employers are encouraged to consult with legal counsel to discuss options and strategies for ensuring compliance with this new regulation.

For additional information on state-specific impacts, see: https://www.whitehouse.gov/sites/whitehouse.gov/files/documents/OT_state_by_state_fact_sheet_final_rule_v3.pdf

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

DOL Issues Final Rule Revising Overtime Regulations

On May 18, 2016, the Department of Labor raised the minimum salary level that certain employees must be paid to qualify as exempt from the overtime pay requirements of the Fair Labor Standards Act. Under current regulations, executives (supervisors), administrative employees and professionals, must both perform “exempt” duties as defined by the DOL and be paid a guaranteed salary of at least $455 a week ($23,660 annually). This new regulation significantly increases the salary threshold to $933 a week ($47,476 annually), however, it does not alter the primary duty test. The federal government predicts that the new rule will result in companies having to pay an additional 4.2 million employees overtime, boosting wages for workers by $12 billion over the next ten years.

Additionally, as noted in comments included in a recent Law360 article, the DOL’s rule, while potentially extending overtime protections to 4.2 million more employees, may also have adverse effects for certain employees. In an effort to offset costs businesses may incur as a result of the new rule, both in terms of the expense associated with ensuring compliance, as well as having to pay overtime to formerly exempt employees or sufficiently increasing an employee’s salary so as to maintain the exemption, certain employers may reduce rates of pay, cut back scheduled hours to reduce risk of overtime, or offer less generous benefits to non-exempt employees.

A link to the new rule can be found here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-11754.pdf

Related guidance issued by the DOL can be found here: https://www.dol.gov/sites/default/files/overtime-overview.pdf

Lindsey L. Dunn
LDunn@williamsparker.com
(941) 552-2556