Eligibility for Overtime Pay – Redo?

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August 1, 2017

Recent action taken by the Department of Labor has started to signal the likely “redo” of the Fair Labor Standards Act regulations regarding overtime pay and which employees are eligible for overtime pay.  The Department of Labor issued a Request for Information document that asks employers to respond to a series of questions on overtime pay eligibility and the exemptions from overtime pay requirements.  This is not the start of a new rulemaking process but rather a very preliminary move to request information that will be used to formulate a new rule on eligibility for overtime pay and what type of employees are exempt from overtime pay for hours worked.

The questions posed by the Department of Labor are not specific enough to identify any detail of what might be a new rule on overtime pay eligibility.  The questions range from references to eliminating the salary test as part of the calculation to determine whether an employee is exempt to seeking input on whether the amount of salary under the salary test should be different based upon a geographical region or the type of industry the employer is in.  The suggestion from these questions is the Department of Labor is looking at a broad range of options ranging from eliminating the salary test in its entirety to modifying the salary test to be a lesser amount than what was proposed by the Obama Department of Labor.  It is far too early to give any guidance or direction to employers on what changes might take place although it is clear that the proposed overtime pay rule which raised the salary level to $47,500 will not become the law of the land.

The legal challenge to the overtime pay rule change is pending in the Fifth Circuit Court of Appeals based upon a decision by a Texas federal judge.  The Department of Labor has continued to pursue a part of that case but not seek a court ruling that would allow the implementation of the new salary level to qualify an employee as exempt from FLSA overtime payments.  The issue being litigated in the Fifth Circuit Court of Appeals centers on the question whether the salary level requirement is actually allowed as part of the Department of Labor regulations because there is some suggestion that the original legislation never envisioned a salary level test as part of the determination of whether an employee is exempt from overtime pay requirements.  We can assume this matter will linger for a while but at least we know the Department of Labor is looking at this issue and that it is likely something will be proposed in the future.  Responses to the Request for Information are due over the next 90 days which may then start the rulemaking process for a new overtime pay exemption rule.

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