As the Wall Street Journal reported this week, the Department of Labor’s (DOL) highly anticipated rules regarding employees’ eligibility for overtime are not likely to be finalized until sometime in mid to late 2016. This timeline, which is later than the Spring-time anticipated date, was acknowledged by the Department of Labor (DOL) Solicitor, Patricia Smith, during the American Bar Association, Labor and Employment Section Conference two weeks ago. I attended the panel at which Solicitor Smith spoke, and counsel for both management and employees were surprised by this revelation.
As my firm previously reported, in June 2015, the DOL proposed revisions to the overtime rules. The proposed rules significantly increased the required salary for employees to qualify as exempt. The current salary threshold is $23,660. The proposed rules more than double it to $50,400! Clearly, this is a significant increase and would make many more employees eligible for overtime pay.
Solicitor Smith said the reason for the delay in the issuance of the final rules is the significant number of comments that were received by the DOL, which are in excess of 200,000! This is three times more than the number of comments received by the DOL when it revised the regulations back in 2004.
With regard to substance of the rules themselves, Solicitor Smith suggested that the final salary threshold may be slightly lower than the $50,400 set forth in the proposed regulations. (Small comfort for employers.) She also mentioned that the regulations may contain indexing requirements – meaning that increases to the salary threshold would be automatically tied to the Consumer Price Index – and this could occur as frequently as annually! (In other words – annual automatic raises! Big problems for employers!)
Most troubling, however, is that the Solicitor Smith suggested that the final regulations may include revisions to the duties tests, but did not indicate what those changes may be. The DOL did not issue proposed regulations regarding the duties test; rather, it solicited input from commentators including asking what, if any, changes should be made. In my opinion, this request for information does not constitute the required notice and comment period that the agency has to permit before issuing regulations, but Solicitor Smith suggested that the DOL believes that the agency has done enough to thwart any administrative rulemaking challenge. And, the DOL has to be concerned with the 2016 Presidential election – a Republican president could very well pull these regulations. Depending on how it turns out, the DOL’s sub rosa rulemaking may be stopped in its tracks. We shall see!