Obama Asks the Department of Labor to Update Salary Threshold
In 2014 then-President Obama directed the Secretary of Labor to update the overtime regulations. Specifically President Obama was concerned about the current salary threshold of $455 a week ($23,660 each year). That salary threshold had not been increased for a decade since 2004.
In July of 2015, the Department of Labor (DOL) published its proposal to tie the new salary threshold for exempt employees to the 40th percentile of weekly earnings for full-time workers nationwide. They also proposed an automatic update of the salary threshold.
Nearly 300,000 comments were submitted to the DOL from advocates, businesses, organizations and other groups regarding the proposed regulations.
In May of 2016, the DOL issued the final rule which raised the salary level to $913 or $47,476 a year. That new salary level was over twice as high as the previous level.
Additionally, as the rule came out mid-year and gave businesses a mere 6 months to revamp employment policies, reanalyze employee salaries, hourly rates, and scheduled hours.
Overtime Rule Challenged in Federal Court
Only days before the final rule was to take effect on December 1, 2016, two lawsuits brought in Federal Court halted the final rule with a temporary injunction. The two cases were combined into one case and included a suit from 21 states and a suit from various business organizations.
Judge Amos L Mazzant III of the U.S. District Court for the Eastern District of Texas ruled that the DOL does not have the authority to set a salary level test or create an automatic updating mechanism under the FLSA.
Under the Obama Administration, the Department of Labor appealed the decision. Numerous extensions later the DOL, on June 30, 2017, filed a short reply. The DOL stated that it is continuing with the appeal and the DOL does have the authority to set a salary threshold for the exemptions.
Additionally, the DOL stated that it “decided not to advocate for the specific salary level set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.”
Although it is now unlikely that the overtime rule could see backdating, it is still alive and kicking.
Now the DOL has issued a Request for Information (RFI) as a means to gain opinion on how businesses prepared for the proposed 2016 rule and what other options regarding the overtime rule could include.
The RFI is the first step in reevaluating the salary level.
DOL’s Authority Still Being Determined
Exactly what the new Overtime Rule looks and feels like will depend on the ruling of the Fifth District Court on the preliminary injunction.
If the Court determines that the DOL does not have authority to issue a salary threshold, then the DOL may do away with a salary threshold. That means that the DOL would possibly issue the final rule without a threshold and based on a duties test.
However, if the Fifth District Court overturns the preliminary injunction and rules that the DOL does have the authority to create a salary threshold, then the DOL could propose a new rule with a salary threshold, or with multiple thresholds.
Meanwhile, businesses and other interested parties have only 60 days to provide information to the DOL in response to the RFI. Employers should respond quickly, especially as the DOL appears to be starting over and very open to different options for the overtime rule.
Update: The final court decision for the Obama Overtime Rule has been issued.
Let SwipeClock Help
Even while businesses wait for a final ruling and status on the Federal Overtime Law, they must still comply with other aspects of the Fair Labor Standards Act and with other state and local employment laws.
Additionally, these businesses have to also comply with the Family Medical Leave Act, the Affordable Care Act and any other national or local laws that are enacted. SwipeClock provides a comprehensive array of workforce management and time tracking tools that can help businesses to more easily stay in compliance with local and national laws.
Records are effortlessly kept for years and accrual is automatically tracked and reported to employees according to the state and city laws. Additionally, with geo-timekeeping clocks, businesses can effortlessly track time worked in specific cities to ensure compliance.
Written by Annemaria Duran. Last updated on September 9, 2017.