You may recall that, in late June 2015, the U.S. Department of Labor issued a Notice of Proposed Rulemaking seeking public comment on proposed changes to the Fair Labor Standards Act’s “white-collar” overtime exemption regulations. The DOL’s proposed rule changes would more than double the minimum salary required for the FLSA’s white-collar exemptions from the current $455 to approximately $970 per week, with additional potential increases each year based on inflation. Also, while the DOL did not propose specific changes to the exemptions’ duties tests, it invited public comment on the subject, hinting that changes to the duties tests likely would be forthcoming in the final regulations.
The period for public comment on the proposed rules closed in September. Since September, observers have speculated about when the DOL would issue final binding regulations. Many commentators believed that we would see final rules likely sometime in late 2015/early 2016. Employers have begun reviewing their pay practices to being planning for the implementation of the final regulations, which likely will require conversion of many employees currently treated as overtime exempt to non-exempt status or significant changes to the pay of these employees to meet the anticipated increased minimum salary requirement.
Earlier this month, the DOL finally indicated when we could expect the final FLSA overtime exemption regulations, and the answer came as a surprise to many. As reported by the Wall Street Journal last week, Solicitor of Labor Patricia Smith said during a panel discussion at the American Bar Association’s Labor and Employment Law conference in Philadelphia that the DOL did not expect to issue the final regulations until “late 2016.” (The WSJ article noted that this comment elicited “gasps” from the attendees in the audience, confirming that the wage and hour laws can be much more exciting than we think!)
This news is a bit surprising, as the DOL seems to be waiting until the very end of the Obama administration to issue the final regulations. That said, employers now know that they will have more time than initially expected to prepare for the likely sweeping changes we anticipate to the FLSA white-collar overtime exemption regulations.
Because of the significance of the expected changes to the exemption tests, this delay does not mean that employers should put off thinking about these issues. Now is still the time to begin developing a strategy to access and address the exempt status of many white-collar workers. This delay is good news for employers, but not an excuse to avoid the issue. Advance planning and preparation will only help employers address what likely will be the most significant changes to the overtime exemption tests we have ever seen.