With Labor Day just past, it seems appropriate that we learn news of DOL’s ever controversial proposed changes to the Fair Labor Standards Act (FLSA). A federal judge in Texas struck down the overtime rule which has been on hold since November of last year. As employers everywhere clandestinely rejoice, it’s not for lack of compassion for their employees. At the crux of the controversy was the minimum annual salary threshold and this sent employers into a tailspin around this time last year.
After a few short days following the ruling, The Department of Labor just announced it will drop it’s appeal and accept the decision. Still, all indications point to a revised update to FLSA that many employers and industry associations will find far more reasonable. The need for the threshold to increase is important. Organizations such as IPMA-HR, CUPA-HR, and SHRM have all responded in support of overtime reform, but stopped short of getting behind a salary threshold increase of more than double.
A new Request for Information (RFI) has been issued by the Dept of Labor asking for input from employers and the community hopefully signaling a more agreeable change to a law that hasn’t been updated since 2004 for “white-collar” workers. The overturned rule is not an end to the discussion, but rather an opportunity for improvement.
Still confused about the status of the proposed overtime regulations? Well, you are not alone. Since the preliminary injunction on Nov 22nd, 2016, many employers are left wondering if they will ever need to implement the courses of action they had ready for December 1st. And this is one scenario where being prepared ahead of time was a disadvantage. In a recent SHRM article, What’s Next for Employers Under the FLSA Overtime Rule?, we learn more than half of the audience at a conference on employment law already moved forward with reclassification changes.
In the same SHRM article, Tammy McCutchen, former administrator of the DOL’s wage and hour division under President George W. Bush and a principal with Littler in Washington, D.C, talks about what she sees as the future of the regulation. She encourages the Department of Labor (DOL) to consider a “restart and redo”. This would include proposing a new rule with the opportunity for another comment period before the final ruling.
There are some general thoughts that the threshold was set too high, especially for parts of the country where cost of living is lower. More than doubling the existing threshold ($23,660 t0 $47,476) can put a drain on employers. McCutchen goes on to say in the article that she thinks a threshold of $35,000 is a better place to start. Most people agree an increase is needed, but a smaller step should be taken.
Unfortunately there is still more waiting we must do until we know which direction this regulation will take. In the meantime, keep those plans ready because you never know what will happen next.