Management's Workplace Lawyers

Overtime Rule Revisited by Trump DOL

July 27, 2017

The Department of Labor (DOL) under President Trump has begun its review of the controversial overtime rule that was halted in its tracks last November. Yesterday, the DOL issued a Request for Information (RFI) on the Part 541 overtime regulations that were finalized in the 2016 Final Rule. 

As we discussed in our November 23, 2016 E-lert, the DOL’s 2016 Final Rule would have more than doubled the salary requirement for the white collar exemption (executive, administrative and professional) employees from $23,660 per year ($455 per week) to $47,476 per year ($913 per week).  In November 2016, however, a federal judge in Texas issued a nationwide preliminary injunction that prevented the DOL from enforcing the new salary level that was scheduled to go into effect on December 1, 2016.  The Obama DOL appealed the injunction to the Fifth Circuit Court of Appeals, but (foreshadowing its position on the Rule), the Trump DOL indicated in its brief to the Court that it decided not to pursue a $913 weekly salary level for the exemption. 

The DOL has instead issued the RFI in an effort to determine the appropriate salary level by soliciting input from the public.  The DOL has requested responses to 11 specific questions

  • Would updating the 2004 salary level of $455 per week for inflation be an appropriate basis for setting the standard salary level?
  • Should the regulations contain multiple standard salary levels?
  • Should the Department set different standard salary levels for the various exemptions?
  • Should the standard salary level be set within the historical range of the short test salary level, at the long test salary level, or based on some other methodology?
  • Does the standard salary level of $913 per week set in the 2016 Final Rule work effectively with the standard duties test or does it eclipse the role of the duties test in determining exemption status?
  • To what extent did employers, in anticipation of the 2016 Final Rule, increase salaries of exempt employees or decrease newly non-exempt employees’ hours?
  • Would a test for exemption that relies solely on the duties performed by the employee without regard to the amount of salary paid by the employer be preferable to the current standard test?
  • Does the salary level set in the 2016 Final Rule exclude from exemption particular occupations that have traditionally been covered by the exemption?
  • Is the 2016 Final Rule’s allowance for non-discretionary bonuses and incentive payments to satisfy up to 10 percent of the standard salary level an appropriate limit?
  • Should there be multiple total annual compensation levels for the highly compensated employee exemption?
  • Should the standard salary level and the highly compensated employee total annual compensation level be automatically updated on a periodic basis to ensure that they remain effective?

The comment period will remain open for a period of 60 days from the date of publication in the Federal Register, i.e., until Monday, September 25, 2017.

After receiving responses to the Request for Information, the DOL will likely initiate a new rulemaking process leading to a salary threshold significantly reduced from the $913 per week requirement of the 2016 Final Rule.  In prior published comments new DOL Secretary Acosta suggested that the annual salary requirement for the white collar exemption should be closer to $33,000.

If you have any questions on how this development may impact your business, please contact one of the attorneys at Shawe Rosenthal.