Final DOL Overtime Rule Update: Are You Prepared?
What is important for you to know? Are you prepared?
- These new regulations go into effect on December 1, 2016 but you and your clients need to be prepared and take potential action now.
- Any employee paid less than $47,476 on an annual basis must be classified as non-exempt and be paid overtime at the rate of 150% of their normal hourly rate. OR conversely, any exempt employee currently making less than $47,476 must have their salary increased to this new level.
- The final rules also adjust this figure upward automatically every three (3) years, based upon Census data as to employee salaries.
- It is also important that employers categorize employees as exempt, are properly exempt – not only under the salary level test above, but also under the salary basis and duties test.
- Consult with legal counsel for specific advice.
Visit the DOL’s site for additional resources.
With the December 1, 2016 deadline for the DOL’s Final Overtime Rule approaching, employers across the country are urgently working to implement new compensation and classification practices. But recently, the DOL has been facing much criticism and resistance, as evidenced by a duo of federal lawsuits filed in September and a House vote to delay the rule’s implementation.
The first suit was filed by a coalition of 21 states, and the second by a coalition of business groups led by the U.S. Chamber of Commerce. Both sets of plaintiffs argue that the DOL was “arbitrary and capricious” in adopting the new threshold — i.e., that the department ignored evidence in the record and failed to sufficiently explain the basis for its new rule, which more than doubles the salary-level threshold for employees to be exempt from overtime.
Further resistance came September 28, when the House Rules Committee debated proposed legislation, introduced by Rep. Tim Walberg (R-Mich.), that would delay implementation of the final rule. The legislation, known as The Regulatory Relief for Small Businesses, Schools and Nonprofits Act, would delay the rule until June 2017, if the Senate were to also pass it and if it were signed by the President.
Walberg argued before the committee, stating, "We all agree our nation’s overtime rules need to be updated and modernized …. the administration should withdraw the rule completely and update our laws responsibly. Unfortunately, the clock is ticking. A six-month delay provides much needed relief."
Rep. Rob Woodall (R-Ga.) also spoke regarding his support for the bill, noting that while the rule was necessary to update a standard that had not been addressed for more than a decade, it was implemented too quickly and without enough time for employers to react. Woodall argued, “To double [the salary threshold] overnight with virtually no warning to the small business community, the nonprofit community, the education community, is not the right way to govern.”
Despite numerous Democratic objections and the potential threat of a presidential veto, the House agreed. With a vote of 246 to 177, the House determined a delay was necessary and that the final rule’s effective date should be pushed back an additional six months.
Visit www.dol.gov for the latest updates but be prepared for a December 1 deadline.