New Overtime Rules Are Officially On The Way

March 17, 2016 |

The long awaited changes to the FLSA Overtime rules are one step closer to becoming the law.  The Final Rules were sent to the White House’s Office of Information and Regulatory Affairs (OMB) on Tuesday.  If the OMB follows its normal review timeline, the Final Rules should be approved in four to six weeks.  This means we will see the new overtime regulations by May.

Why the sudden confidence that we will actually see these proposed rules in May?  If the Final Rules are not released by mid-May, the rule will likely be at the mercy of the next Congress and president.  These overtime regulations are viewed by this administration as a major achievement, and the result of a two year old Executive Order.  A Republican president would almost certainly veto them.

Despite the sped up timeline, the DOL has not given any indication that it intends to extend the length of time it will take for the rules to take effect.  It still appears that the plan is for the rules to take effect 60 days after being published.  This means employers will have 60 days to reclassify employees or raise salaries.

Consider the following:

Audit your job classifications now.  If you have exempt employees earning less than $50,440.00 per year, and you haven’t already started exploring a change, now would be a great time to start.  One option is to re-assign non-essential duties, reclassify the employee as nonexempt, and limit overtime opportunities.  Another is to add additional duties and be prepared to raise the salary in order to maintain the exempt status.

There is a chance the DOL will adopt a lower salary threshold, some have suggested $40,000, but the only firm number we know at this point is the $50,440.00 – the number published in the proposed regulations.  We recommend being prepared for the worst, and hoping for the best.

Audit job descriptions. There is a chance that the Final Rules will also feature a new duties test.  The test the DOL is considering is known as the California Test, which is arguably a more straight forward test.  The California test is a quantitative one, if an employee spends more than 50% of his or her time on exempt duties, he or she is exempt.

Even if the new duties test is not adopted, no employer will regret performing an audit of job descriptions.  A well written job description that accurately reflects the essential functions of a position is a great tool for a wide variety of functions ranging from performance reviews to disability claims.

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