August 30, 2015

DEADLINE: Interested Parties Must Submit Comments On DOL Overtime Rule By September 4

As Connecting the Dots reported in July, the U.S. Department of Labor (DOL) has proposed overhauling federal overtime regulations. This Friday, Sept. 4 is the deadline for commenting on the DOL’s draft. The National Association of Manufacturers has asked MSCI to remind its members about this deadline and to direct interested parties to NAM’s website, which includes instructions and a template for submitting comments to the DOL. (See the “In Your Words” tab under “Current Labor Advocacy Campaigns.”) 

As a reminder, under the Fair Labor Standards Act, there is a two-part test in order to exempt an employee from overtime pay eligibility. First, the employee has to earn more than a certain dollar amount per week/year; and second, the employee has to hold a position that falls within what is known as a “white collar” exemption where the employee performs duties that are executive, administrative or professional in nature. That second qualification is known as the “duties test.” The DOL’s proposed rule seeks to increase the salary threshold from $455/week ($23,660 annually) to $970/week ($50,440 annually). Highly compensated employees’ salary levels are also increased from $100,000 per year to $122,148 per year. The DOL’s proposal also seeks to establish a mechanism for salary thresholds to be adjusted automatically as a function of inflation or a certain percentage of salaried workers. 

While the newly proposed rule does not make any changes to the “duties test,” the DOL has asked for feedback from employers as to whether this duties test should be changed. NAM believes it is very likely changes to the duties test could be part of a final rule. Click here to read more from Connecting the Dots about the potential impact of this rule. 

In general, if this rule ultimately takes affect, to keep labor costs constant, businesses may:

  • Allow guaranteed overtime pay, but lower employees’ hourly wages;
  • Provide workers’ less flexibility, including by restricting ability to work remotely;
  • Provide workers’ with fewer opportunities for advancement;
  • Reduce hours to avoid overtime premiums by limiting workers to a 40-hour workweek or reducing employee flexibility;
  • Reduce bonuses, benefits for base wages;
  • Increase salaries of employees with salaries slightly below the threshold so that they may remain exempt from overtime pay.