Uncle Sam Wants You . . . To Tell Him a Little About Overtime

A Department of Labor (DOL) 2016 Final Rule pushed federal regulations under the Fair Labor Standards Act (FLSA) that would have more than doubled the “threshold” below which nearly every salaried employee would be entitled to overtime. In November 2016, a federal district court prevented the new threshold from coming into effect, and the subsequent election of President Trump called into doubt whether revised rules would ever be implemented.

Those doubts have been quelled—somewhat. On July 26, 2017, the DOL issued a proposed rule, labeled as a “Request for Information,” to address stakeholder concerns that the standard salary level set in the 2016 Final Rule was too high. In the form of a eleven questions, the DOL seeks public input regarding various options for future changes to the overtime rule.

Now is the time for employers to have their opinion heard on how to best structure any future changes. As you can see from the DOL’s questions, paraphrased below, the DOL wants to know how individual employers would structure overtime exemption eligibility, as well as how the DOL’s rules and proposed rules affect those employers. Here are the questions:

1. Should the 2004 threshold ($455 per week) simply be updated for inflation? If so, at what rate?
2. Should there be multiple thresholds across different sizes of employers, locations, etc?
3. Should there be different thresholds for executive, administrative, and professional exemption categories?
4. Should there be changes to the duties tests to determine whether someone falls into an exemption?
5. Does the 2016 Final Rule threshold “eclipse” the duties test?
6. To what extent did employers already increase salaries in anticipation of complying with the 2016 Final Rule? What additional changes were made, if any, to revert to the 2004 standards after the injunction? What special challenges did smaller employers face?
7. Should the exemption from overtime be based solely on duties performed without a salary threshold at all? How would this test be structured?
8. To what extent does the salary threshold from the 2016 Final Rule make employees who have traditionally been exempt from overtime non-exempt from overtime? What types of occupations have been affected?
9. Is it appropriate that the 2016 Final Rule included non-discretionary bonuses and incentive payments as a basis for satisfying up to 10% of the threshold? Is that amount appropriate, or should these amounts be credited in some other way?
10. Should there be multiple thresholds for “highly compensated employees” across different sizes of employers, locations, etc?
11. Should the salary threshold be automatically updated periodically in order to ensure that they remain effective in identifying exempt employees, in combination with the duties tests? If so, how should that automatic update be formulated, and how often should it occur?

If you have ever seen a government regulation and wished you could be king, queen, or Secretary of Labor for the day, then now is your chance. Already, the Request for Information has over 24,000 comments.

Contact Evan Bonnett of Hinshaw’s Rockford office or your regular Hinshaw attorney for any assistance in formulating your input to the DOL, or if you have any other questions on this important topic.