Today, the Department of Labor (DOL) published a Request for Information seeking comment from the public regarding the regulations governing overtime exemptions. As you likely recall, the DOL revised the salary requirement in 2016 to require that exempt employees be paid a minimum of $913 per week (or $47,476 per year). This was a substantial increase from the 2004 level, which was set at $455 per week, or $23,660 per year. That regulation met with a legal challenge and was temporarily blocked by a federal court in Texas. While that litigation is still ongoing over whether the DOL has the authority to require any minimum salary requirement, the DOL has indicated its intent not to enforce the $913 per week requirement.
In light of the litigation, along with President Trump’s Executive Order requiring administrative agencies to minimize regulatory burden, the DOL has issued a Request for Information to assist it in creating updated overtime rules. The Request for Information is open until September 25, and indicates that the DOL is open to considering a large change to the overtime regulations. The Request seeks feedback on everything from the amount of the minimum salary to the duties of exempt employees to whether there should be no minimum salary requirement at all. Specifically, the DOL requests comment on:
- Whether the $455 minimum level should be increased by an amount equal to inflation? If so, what is the appropriate measure of inflation?
- Whether the $455 minimum level should be modified to continue to exclude the lowest 20% of salaried workers in the lowest paying region, as was used in establishing the 2004 level?
- Alternatively, should the minimum level be set based upon a defining factor, such as employer size, geographic region, metropolitan area, or other factor?
- Should different minimum salary levels be set for the executive, administrative and professional exemptions rather than having one generally applicable level?
- How well does the salary amount match with the duties test? Does the salary level become the predominate factor? If not, at what point does the salary level no longer serve as a reliable indicator of exempt status? Would it be better to have solely a duties test? If so, what duties would accurately show exempt status?
- Should the standard duties test be updated? If so, with what duties?
- How did you respond to the 2016 revisions? Did you increase wages, decrease hours, switch to an hourly rate, lower the hourly rate to maintain the same pay level, change overtime policies, or some other method?
- Does it appear that certain occupations were no longer included as exempt under the higher rate? Did those occupations spend 20 – 40% of their time performing exempt functions?
- Was the cap at permitting no more than 10% of the minimum salary requirement to be paid by non-discretionary bonus a good level? Should it be tied to salary level?
- Should the minimum level be set to automatically adjust? If so, what measurement should be used? How often should it be adjusted?
This is merely the first step in the review process, but it does indicate a likelihood that revisions are forthcoming, potentially substantial. Given the political climate, any revisions would likely be more business friendly. I would not anticipate seeing any new regulations this year, but perhaps a Notice of Proposed Rulemaking and draft regulations could be out next spring. Comments can be submitted by mail or electronically. Instructions for submitting comments are included in the Request for Information. MRR will continue to monitor the DOL for any new guidance on this subject.