HR Compliance

Back to the Drawing Board: The DOL’s Overtime Overhaul Request for Information

By

Zachary Gregory

| Sep 19, 2017

The U. S. Department of Labor is taking comments on how it should move forward with overtime overhaul

Since the newest regulations to the overtime law were found invalid, employers are subject to the previous version of Fair Labor Standards Act. However, the roller coaster has not ended.

On July 26, 2017, the DOL published a Request for Information in the Federal Register, indicating it intends to attempt an overtime overhaul. Comments to the Request may be submitted until September 25, 2017. The request asks the public for a response to 11 specific questions.

We can use the questions proposed to help uncover some of the possible changes the DOL is considering. Below are five of the more telling questions and what we can infer from them.

1. Should we just update the 2004 salary level based on inflation?

The Court suggested it would be permissible if the DOL adjusted the 2004 salary level for inflation during questioning at the preliminary injunction hearing. In fact, the Court stated, “[I]f [the salary level] had been just adjusted for inflation – the 2004 figure – we wouldn’t be here today … because [the salary level] would still be operating more the way it has … as more of a floor.” This question indicates the DOL may be referencing inflation because they believe it would be acceptable with the courts

2. Should the regulations contain multiple standard salary levels? If so, how should these levels be set: by size of employer, census region, census division, state, metropolitan statistical area or some other method?

The DOL attempts to make a more malleable test here, which, of course, would serve to be more sensitive to changing demographics. However, a change like this would clearly make compliance tough for employers.

3. Should the DOL set different standard salary levels for the executive, administrative and professional exemptions as it did prior to 2004 and, if so, should there be a lower salary for executive and administrative employees as was done from 1963 until the 2004 rulemaking?

Much like the question above about multiple salary levels, this question would likely provide a more effective test. However, would it come at the cost of convoluting the analysis for employers?

4. Would a test for exemption that relies solely on the duties performed by the employee without regard to the amount of salary paid by the employer be preferable to the current standard test?

This question suggests the DOL seems to be accepting the court’s analysis that duties are more important than salary.

5. The 2016 Final Rule, for the first time, permitted non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level. Is this an appropriate limit or should the regulations feature a different percentage cap? Is the amount of the standard salary level relevant in determining whether and to what extent such bonus payments should be credited?

This question indicates the DOL may propose a version of regulations that still allows for bonuses to apply to the salary level.

Given the nature of the questions found in the Request for Information it’s clear the DOL has gone back to the drawing board and may propose something completely different from both the recent failed regulations as well as the 2004 revisions.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

About the Author

Zachary Gregory

As a compliance attorney for Paycom, Zach Gregory monitors legal and regulatory changes at the state and federal levels, focusing on payroll and garnishment laws, to ensure the Paycom system is updated accordingly. He previously worked at a law firm as a tax attorney. He holds a bachelor’s degree from Oklahoma Christian University and a J.D. from Oklahoma City University. Outside of work, Gregory enjoys playing in the backyard with his two boys, and finding new restaurants with his wife and high school sweetheart, Kellyn.

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