New overtime rules are coming (yes, really this time!). Here are eight things employers need to know to prepare.

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Remember that f**king fire drill?

Back in 2016, the United States Department of Labor proposed a rule that would have made millions of workers eligible to earn overtime for the first time by raising the salary-level that exempts certain individuals from overtime eligibility under the Fair Labor Standards Act.

And employers panicked. Many businesses converted salaried employees to hourly. Others got raises. Some received both. It was a mess. The only happy people were the employment lawyers.

But, then a federal judge in Texas entered a nationwide injunction against the proposed DOL rule, and everything went away, except those raises and pay changes that you could exactly stuff back into the tube of toothpaste.

Welcome to Round Two

The DOL is ready to act again.

Last Thursday, Bloomberg Law’s Chris Opfer and Jaclyn Diaz reported here that the Department of Labor plans to propose a rule to raise the salary-level exemption from $23,660 to $35,000.

Break it down for us Eric.

  1. What happens next? The DOL will issue a proposed rule. A comment period will follow. Then, the DOL will issue a final rule.
  2. Will the salary-level exemption shoot up nearly $12,000 all at once? Probably not. The Bloomberg Law article suggests that the DOL will seek comment on a couple of different accelerator mechanisms.
  3. Does this mean no OT pay for anyone making more than the minimum salary level? Heck no! My friend Janette Levey Frisch explains here why salary is just one factor in determining whether an employee is overtime-eligible.
  4. In a nutshell, what are the overtime rules? The FLSA requires that covered employers pay minimum wage ($7.25) and overtime (time and a half on more than 40 hours worked in a workweek) to employees unless they are exempt from these requirements. The exemptions are few and narrowly construed. Most of them require, among other things, that an employee is paid a certain amount in salary.
  5. Will the FLSA duties test would change too?  Probably not. The ‘Obama’ DOL didn’t propose it back in 2016. I’d be surprised if the more conservative ‘Trump’ DOL did. Presumably, “primary duty” will continue to mean the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.
  6. When will these changes eventually take effect? “Regulators want to get the rule finalized before the 2020 election so it will be harder to undo if a Democrat wins the White House,” according to the Bloomberg Law report.
  7. Many states and business groups sued last time to block the new OT rules. Might that happen again? Sounds like it, unless the DOL works with stakeholders to reach an acceptable compromise.
  8. What else can we do to get ready for these changes? You’ve got lots of time to prepare for the final rule. However, don’t sleep on making sure that employees are currently classified correctly (exempt versus non-exempt; employee versus independent contractor; etc.). If ever there was a time to involve an employment lawyer in your HR and business planning, this is the one.  Violations of the FLSA carry stiff penalties and often result in class/collective action litigation.

Be sure to come back tomorrow for a post about my first anniversary at FisherBroyles.

Many of you — especially readers in private practice — have asked me…

  • What’s it like to practice law at a cloud-based law firm?
  • Do clients like it?
  • How do you collaborate with colleagues?
  • Do you have any regrets?

I’ll answer all of these questions tomorrow. See you then.

“Doing What’s Right – Not Just What’s Legal”