You may recall that over a year ago, President Obama directed the Secretary of Labor to “modernize and streamline” the existing Fair Labor Standards Act (FLSA) overtime regulations, specifically with respect to the “white collar” exemptions. The FLSA’s white collar exemptions apply to covered executive, administrative, professional, and outside sales employees. To qualify for an exemption to the FLSA’s minimum wage and overtime compensation requirements, these regulations generally require that an employee receive a guaranteed minimum salary of at least $455 per week and meet one of the duties tests.
Since the President issued this directive, many have speculated about the changes that may be in store for the white collar exemptions. Most speculation has focused on an anticipated significant increase in the minimum salary amount and changes to the duties tests that would eliminate the exemptions’ application to many positions currently exempt from the federal overtime requirements.
The Department of Labor previously announced multiple target dates, including November 2014 and February 2015, to issue the proposed regulations. These dates have come and gone without any announcement. We still fully expect the DOL to comply with the President’s directive and issue proposed regulations in the near future. But with no new target date, when in 2015 that will occur is anyone’s guess.
In the meantime, employers should continue to work to comply with the current FLSA regulations and ensure that all employees they classify as exempt from the overtime requirements safely fall within one of the recognized exemptions. Even after the DOL publishes proposed regulations, those regulations will not take effect until completion of a public notice and comment period and issuance of final regulations. Thus, the rules we have now likely will remain the rules in effect for a fair time to come.
Don’t Forget About State Law!
Regardless of what the DOL does with the FLSA regulations, any changes will have no effect on the overtime requirements and exemptions of the Pennsylvania Minimum Wage Act (PMWA). While it tracks the FLSA in many areas, the PMWA is a separate and distinct state law that applies to Pennsylvania employers. Complying with the requirements of the FLSA is not enough, and employers in Pennsylvania risk liability by failing to ensure compliance with both overlapping wage and hour laws. New FLSA regulations likely will widen the gap between the requirements of the two laws, increasing the compliance headaches that employers currently face.
Waiting Doesn’t Justify Inaction
Wage and hour class actions filed on behalf of current and former employees remain a significant threat to employers, with the number of such actions increasing each year. Overtime exemption misclassification cases remain near the top of the list of types of wage and hour class actions filed. Unfortunately, patiently waiting for new regulations is not a defense to liability in such actions.
Many employers blindsided by wage and hour class action litigation wish they had identified and addressed risk areas long before they resulted in expensive and time-consuming class-based litigation. When the new proposed FLSA regulations are issued, we will let you know and explain their expected ramifications. In the meantime, stay vigilant about wage and hour compliance, as the risks associated with non-compliance continue to grow.
Wage and hour requirements are frustrating, but employers cannot escape them or the significant risks associated with non-compliance. At our upcoming 25th Annual McNees Labor and Employment seminar, we are going to take an in-depth look at key wage and hour cases and regulatory activity from the past year, including the anticipated new FLSA overtime exemption regulations. The session also will highlight critical compliance issues relevant to our evolving 24/7 workplace and provide recommendations for the proactive employer.