South Bend / Mishawaka, IN – The U.S. Department of Labor forwarded its final overtime rule to President Obama’s Office of Management and Budget last week on March 14, 2016. This is the final step in the process before the rule becomes official, so the DOL appears to be ahead of schedule (as earlier estimates suggested that the final rule would not be published until later this year). The Office of Management and Budget usually takes between 30 and 90 days to review the final, proposed rule. After that review, it is likely the DOL’s final rule will have an effective date between 30 and 60 days after the final publication date.
With these timetables in mind, the final rule could be published as soon as April or May, so employers could be looking at an effective date for compliance purposes of before the end of summer. Whenever that final effective date may be, it is clear the current administration wants to see the overtime changes go into effect before the November election.
We previously wrote about the DOL’s revisions to the overtime regulations last year after the proposed rule was announced on June 30, 2015. (http://maylorber.com/insights/department-of-labor-proposes-expansion-of-overtime-protections/). The proposed changes significantly alter employer’s obligations under the Fair Labor Standards Act (“FLSA”), and the DOL received nearly 300,000 public comments regarding its proposed rule.
If not already a focus, employers should be reviewing their workforces and compensation data to determine what changes will be needed in order to adapt to, and comply with, the DOL’s anticipated rule.
Although it remains unclear what the DOL’s final rule will do, if anything, to the duties test for white collar exemptions, the proposed rule will expand overtime protections to millions of workers in the United States. The DOL’s proposed rule will, at the very least, likely increase the minimum weekly salary necessary to qualify for an overtime exemption from $455 per week ($23,660 annually) to possibly as high as $970 per week ($50,440 annually). Once in effect, the minimum salary threshold will also likely become a moving target on an annual basis, with it updating automatically every year (possibly tied to an earnings index), so employers will need to be constantly (or at least annually) reviewing its compliance with the FLSA regarding the DOL’s proposed changes.
The content of this article is for informational purposes only, and does not contain, nor should be construed as containing, legal advice.
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