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Department of Labor Request for Information on Overtime Rule

Friday, August 4, 2017   (0 Comments)
Posted by: Marife Ramos
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Department of Labor Published a Request for Information on Overtime Rule:
Implementation of 2016’s New OT Rule is Still on Hold

In 2016, the Department of Labor’s (DOL) Wage and Hour Division (WHD) revised the regulations on the exemption from overtime pay implemented under the Fair Labor Standards Act for employees in the executive, administrative, professional, and computer job categories. Released in May 2016, one of the provisions of the final rule included the revision of the standard salary level that differentiates exempt employees (i.e., not eligible for overtime pay) to non-exempt employees (i.e., eligible for overtime pay) — from $455 per week to $970 per week. The final rule would make an estimated 4 million American workers eligible for overtime pay. While most employers agree that the salary level for overtime needs to be updated to match inflation (it was last adjusted in 2004), they also believe that the salary threshold under the new rule is too steep and “inappropriately excludes from exemption too many workers who pass the duties test.” Despite the opposition, and in preparation to what seemed to be the inevitable implementation of the new rule, some employers started making adjustments and changes to their policies, employees’ salaries, and hours worked. However, just one (1) week before its December 1, 2016 effective date, the U.S. District Court for the Eastern District of Texas granted an emergency motion preventing the DOL from enforcing the new rule. Hence, as it currently stands, the salary threshold for overtime exemption remains unchanged at $455 per week.

On July 26, 2017, the DOL’s Wage and Hour Division officially published a Request for Information (RFI), Defining and Delimiting the Exemptions for Executive, Administrative, Outside Sales and Computer Employees. The Wage and Hour Division of the Department of Labor stated that “The RFI solicits feedback on questions related to the salary level, the duties test, inclusion of non-discretionary bonuses and incentive payments to satisfy a portion of the salary level, salary test for highly compensated employees, and automatic updating of the salary level tests.” Following are some of the questions that the department is seeking comments and information on (for the full text of the questions, click here):

  1. Would the 2004 salary level and the methodology used to update the salary level in 2004 be an appropriate basis to set the current standard salary level?
  2. Should the regulations set multiple salary levels (e.g., employer size, census region or division, state, etc.)?
  3. Should there be different salary level exemptions for executives, professionals, and administrative?
  4. Should the standard salary level for exemption be based on historical range of the short test salary level, long test salary level, somewhere in between, or on a new methodology? Is it necessary to change the duties test?
  5. At what salary level does the duties test no longer fulfill its historical role in determining exempt status?
  6. Did you make any changes to employees’ salaries and/or hours of work or in any of your company’s policies in anticipation of the 2016 Final Rule? If so, what are the impact of such changes both to the employees and employers?
  7. Can exemption be based solely on a duties test? If so, what would be the elements of a duties-only test?
  8. What are the traditionally-exempt occupations that were excluded from exemption by the 2016 Final Rule? Do employees in these occupations perform more than 20 or 40 percent non-exempt work per week?
  9. Is 10 percent the appropriate cap for permitting non-discretionary bonuses and incentives (including commissions) to satisfy the standard salary level?
  10. Should there be multiple total annual compensation levels for highly-compensated employee (HCE) exemption (e.g., by size of employer, census region/division, state, etc.)?
  11. Should the standard salary level of an HCE’s total annual compensation, in combination with their duties test, be automatically updated periodically?

Comment period is open for 60 days and ends on September 25, 2017.
Comments can be submitted according to the instructions published in the Federal Register at http://www.regulations.gov/

Have questions?

A Biddle Consulting Group representative will be happy to discuss any questions you have about this post or other AAP/EEO compliance concerns. Call us at (800) 999-0438 or send an email to staff@biddle.com.

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