For what seems like an eternity, we have been waiting for the U.S. Department of Labor to issue the new Fair Labor Standards Act “white-collar” overtime exemption regulations. While many have speculated on when the final regulations would be issued, most assumed that the DOL would wait until the summer or fall of 2016 to issue the new regulations.
In a somewhat surprising move, the DOL on Tuesday sent its final regulations to the Office of Management and Budget (“OMB”) for its review. OMB review is the final step in the rulemaking process and can take anywhere from a few weeks to a few months. After completion of OMB review, the final rule will be published in the Federal Register and likely take effect 60 days after publication.
It now appears that, rather than in late 2016, the new FLSA white-collar overtime regulations will be issued this spring or early summer. We do not yet know what the final regulations will contain, but based on the content of the proposed regulations issued last June, we can assume that the changes to the FLSA white-collar exemptions will be significant and result in many currently exempt employees losing their exempt status. Specifically, we expect a sizable increase in the minimum salary requirement, as the proposed regulations would double the current $455 minimum weekly salary requirement to approximately $970 (i.e., over $50,000 per year). In addition, we anticipate changes to the duties tests for a number of these exemptions, the details of which are currently unknown.
With Tuesday’s news, it is even more vital for employers to consider how they will respond to the new overtime exemption tests. Many employees currently treated as exempt from overtime will need to be reclassified as non-exempt or otherwise have changes made to their compensation and/or duties to remain exempt. Employers likely will have only 60 days to respond to the new rules and make necessary changes to employees’ compensation and overtime exempt status. Now is the time for employers to consider the impact that the anticipated changes would have on the status of their exempt workforce and determine next steps.