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Whew! The last 36 hours have filled the Twittersphere and so many other arenas with speculation about the U.S. Department of Labor's (DOL) long-awaited, FLSA "white-collar" regulations. Here is my preliminary advice. Follow these instructions.
- Take a deep breath.
- Remember these are only PROPOSED regulations.
- Prepare to advocate; you'll have 60 days from the date of publication in the Federal Register to share YOUR business case for supporting or opposing, in whole or in part the regulatory proposal.
- Repeat Step 1; it could be many months before the final rule is published.
- Then there will likely be at least a 30-day period before the final rule becomes effective.
- So we could be looking at late 2015 into 2016 before this rule goes into effect; depending upon the DOL's diligence and pressure it might be receiving from the White House.
So what am I talking about? Let me take a stab at the nutshell version. The rules that determine whether an employee can be properly classified as exempt e.g., not eligible for overtime are commonly known as the white-collar regulations. They were last updated in 2004. Since at least February 2015 the DOL has been announcing that proposed, revised regulations would again be issued. Now it looks like we are nearly there.
On June 30th, the DOL made the DRAFT, proposed regulations available. The actual regulatory changes comprise just nine (9) pages; the preamble is 286 pages (priceless!). The DOL's website reads (as of this writing), "Although the Office of Management and Budget (OMB) has reviewed and approved the Notice of Proposed Rulemaking (NPRM), the document has not yet been published in the Federal Register." So to keep an eye out and check for yourself, you may want to bookmark the DOL's new web page on this topic.
So what's all the fuss? Well, so far it appears that in some respects the news is better than we might have feared, for employers anyway and in some respects more ominous. Of course to be exempt an employee must meet three tests: (1) minimum salary; (2) salary basis; and (3) a duties test. The draft, proposed regulations more than double the minimum salary from what it is today: from $455/week to $921/week. Why would I say that news is better than what we feared? As recently as yesterday I was reading projections and speculation that this threshold might increase to $50,400 between now and the time the final rule is published.
What might not have been anticipated was the proposal that the minimum salary test would be adjusted annually thereafter to a salary rate "published annually by the Secretary [of Labor] in the Federal Register at least 60 days earlier." The proposal does not indicate however how that rate would be calculated, to what it would be tied, etc.
In the draft, proposed rule the DOL also indicates that despite lots of speculation and rumor they are not proposing any changes to the duties tests at this time. They are, however inviting during the notice and comment period feedback as to whether changes should be made and, if so what they should be.
Is this really that much of a big deal? The DOL estimates that 4.6 million workers who are currently classified today as exempt would become non-exempt and eligible for overtime under this proposed rule. Think about your own staffing and compensation. If you currently employee an employee who earns less than $921/week and you currently pay that employee a salary and not overtime you might not be able to do that moving forward. You might have to convert that employee to non-exempt status and start paying overtime. What would that cost you?
Next Steps: Advocate, advocate, advocate. Build YOUR business case. The DOL is asking for your feedback. Do not miss this opportunity to share how these proposals will impact your business, for better or worse.
How? I invite you to join this month's webcast on July 22nd at 10:00 EST when we will walk through:
- the highlights of the proposed rule;
- the issues and questions for which the DOL is asking for more information;
- methods for calculating the fiscal impact the proposed rule will have on your company and your employees; and
- steps and resources for getting your message out.
To register or for more information click here. Pre-approved by HRCI for 1.25 business credits.
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