Remember all of the time and resources employers devoted to preparing for the change in overtime regulations in 2016? Remember how employers painstaking examined those jobs that were “on the bubble” of being exempt or non-exempt to determine whether it was a better business decision to increase those salaries to the new minimum or budget for overtime? And remember in late November last year-a couple of days before Thanksgiving-a judge in Texas issued a nationwide injunction against implementation of the rule? After that, the issue just virtually fell off of most employers’ radar. It wasn’t anymore about implementing the new overtime rules; employers wondered, rather, if they should keep in place the changes that they had already made in anticipation of the new rule. On the eve of the inauguration of Donald Trump, few speculated on what the new administration would ultimately do about the pending challenges to the regulations that more than doubled the threshold for exempt status employees.
As readers may recall, the DOL immediately appealed the decision which resulted in the temporary injunction of the new rules. And, like most litigation, the case sat in the appeals court while the parties filed their briefs. In a move that should be of no surprise to anyone, the DOL, headed by newly appointed Secretary of Labor Alexander Acosta, has decided not to defend the overtime rule finalized under the Obama Administration. Instead, in its brief filed on June 30th in the case, took the position that some sort of increase to the salary threshold is appropriate, but failed to defend the sizeable increase under the current regulation. This means that for the foreseeable future, the 2004 rule, setting the salary threshold for exempt employees at $455 a week will remain in place.
Meanwhile, the DOL has submitted a Request for Information (RFI) regarding the final overtime rule to the Office of Information and Regulatory Affairs (OIRA) for its review, signaling that the agency intends to undergo a new rulemaking process for the overtime rule – likely intended to result in a proposed rule that sets the new threshold for exempt employees somewhere between the current amount and the over $47,000 annually set by the now abandoned Obama Administration rule. An RFI allows a governmental agency to obtain public input on whether a new rule or changes to an existing rule are warranted. During the RFI process, any interested individual or group has the opportunity to provide input into what changes they believe that a rule should undergo. As one can imagine, this is a laborious and time consuming process.
In the meantime, although the salary test for exempt status remains at the 2004 level, employers must remember that their exempt employees also meet the duties test under the DOL regulations in order to meet the white collar exemptions. That test, in summary, requires that the primary duties of the purportedly exempt position must meet the definitions of executive, administrative or professional employees. The DOL has not indicated to date that it intends to revise that requirement for the white collar exemptions.
