Where Are Those Final FLSA Overtime Regulations?
It is almost certain that the overtime rules under the Fair Labor Standards Act will change, making many more employees eligible for premium overtime pay and busting budgets for many local government employers. The U.S. Department of Labor (DOL) published the proposed new overtime regulation on July 6, 2015. The primary change proposed is an increase in the minimum weekly salary that a person must be paid before qualifying for exemption from overtime premium pay. Under the current rules, an employee making as little as $455 per week ($23,660 per year) can be exempt. Under the proposed change, an employee would have to make at least $970 per week ($50,440 per year) to be exempt. DOL also raised the prospect of changes to the exempt duties tests in the final rule. Now, almost six months later and more than three months after the close of the comment period, employers want to know: when will DOL issue the final rule and when will it be effective? Here is an update on the timing of the changes to the overtime rules.
What the Proposed Rule Says About a Final Rule Publication Date
The proposed new salary threshold of $970 per week represents an amount projected to be equivalent to the 40th percentile of earnings for full-time salaried employees nationwide in early 2016. In the commentary accompanying the proposed rule, DOL said that it will base the minimum salary threshold on data from the first quarter of 2016 to establish the 40th percentile of earnings. This is a very clear sign that the final rule will not be issued until sometime after March 2016 at the earliest.
What the DOL’s Regulatory Agenda Says about a Final Rule Publication Date
In DOL’s Fall 2015 regulatory agenda, published by the Office of Management and Budget in November, the Department reported that it expects to publish the final rule in July 2016. You can find DOL’s Regulatory Agenda here. Of course there is no penalty if DOL misses this self-imposed deadline and in drafting the proposed rule, DOL pushed the publication date back several times. So it isn’t clear how much anyone should rely on this date. Assuming a publication date of July 1st, 2016, however, it is likely that the effective date of the new minimum salary threshold and any other associated overtime rule changes would be between September 1st and October 1st, 2016, as federal agencies typically allow for a 60- to 90-day notice period before major new regulations take effect.
News Media Reports That Publication of the Rule Will Be Delayed
Patricia Smith, the Solicitor of Labor and the third-ranking official at DOL, said at an American Bar Association meeting in early November (before publication of the regulatory agenda) that the new overtime rule would not be final until 2016 and possibly not until late 2016. (For a news report about her comments, see here). Her statement made waves in the media even though what Smith said was not inconsistent with the DOL’s stated intention to use data from the first quarter of 2016 to set the salary threshold or with a July publication date, given the likely 30- 90 day period between publication and effective date. This appeared to be a lot of hullabaloo about nothing.
News Media Reports That Congress Will Intervene and Set a Lower Salary Threshold
Somewhat more interesting is the report from the law firm Fisher & Phillips that Republicans on the U.S. House of Representatives Workforce Protections Subcommittee have asked DOL to reduce the proposed salary threshold of $970 per week to approximate $692 per week ($36,000 a year) and have threatened Congressional action if it fails to do so. (For the Fisher & Phillips report, which cites Bloomberg BNA, see here . I have not been able to find the original BNA report, however).
Any attempt by Congress to legislate against DOL’s final rule will likely be met by a veto by President Obama. That means that both houses of Congress would have to override his veto by a two-thirds majority. Possible, but far from a certainty in this most volatile of election years. If Congress passed such a bill, the President vetoed it, and Congress was not able to override the veto, then the new minimum of $970 per week ($50,440 per year) would go into effect.
Conclusion
All that is a long way of saying that there isn’t much in the way of new and reliable news about when the final new overtime rule will be published. But don’t go looking for it until July. And if you’re at the beach when the new rule is published, don’t fret. I’ll have a blog post waiting for you when you return.
For more information on the substance and background of the proposed new rule, see here or register for our on-demand webinar here.
