Department of Labor Issues Request for Public Comments on 11 Questions About Potential Changes to the Overtime White Collar Exemptions.

Request for Information Suggests All Options Are on the Table Concerning Revisions to the Obama Administration’s 2016 Rules. July 27, 2017
On July 26, 2017, the U.S. Department of Labor issued a Request for Information inviting comments on the 2016 revisions to the white collar exemption regulations. In particular, the RFI seeks comments on 11 questions, which the DOL broadly summarized as concerning the salary level test, i.e., “whether the standard salary level set in that rule effectively identifies employees who may be exempt, whether a different salary level would more appropriately identify such employees, the basis for setting a different salary level, and why a different salary level would be more appropriate or effective.” Comments are due by September 25, 2017.

By way of recap, in May 2016 the DOL issued new regulations, originally scheduled to take effect on December 1, 2016, substantially raising the salary threshold from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). The regulations were temporarily enjoined on a nationwide basis by a federal district judge. Nevada v. U.S. Dep’t of Labor, 218 F. Supp. 3d 520 (E.D. Tex. 2016). In a June 30, 2017 brief filed in the case, which is on appeal to the Fifth Circuit, the Trump Administration’s DOL “decided not to advocate for the specific salary level ($913 per week) set in the 2016 Final Rule” and stated that it intends “to undertake further rulemaking to determine what the salary level should be.” The RFI does not start the process of formal rulemaking. Rather, the DOL specifically states that it “decided to issue this RFI rather than proceed immediately to a notice of proposed rulemaking.”

The 11 questions the DOL asks in the RFI may indicate the direction of the future rulemaking. Among the questions posed are:
  • Whether to revert to the 2004 standard salary level, as adjusted for inflation: “In 2004 the Department set the standard salary level at $455 per week, which excluded from the exemption roughly the bottom 20 percent of salaried employees in the South and in the retail industry. Would updating the 2004 salary level for inflation be an appropriate basis for setting the standard salary level and, if so, what measure of inflation should be used?”
  • Whether there should be multiple salary levels: “Should the regulations contain multiple standard salary levels? If so, how should these levels be set: by size of employer, census region, census division, state, metropolitan statistical area, or some other method?”
  • Whether employers’ efforts to comply with the 2016 Rules undermined their intended impact: “To what extent did employers, in anticipation of the 2016 Final Rule’s effective date on December 1, 2016, increase salaries of exempt employees in order to retain their exempt status, decrease newly non-exempt employees’ hours or change their implicit hourly rates so that the total amount paid would remain the same, convert worker pay from salaries to hourly wages, or make changes to workplace policies either to limit employee flexibility to work after normal work hours or to track work performed during those times?”
  • Whether the salary level test should be abandoned entirely “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?”
  • Whether automatic updates to the salary level are appropriate: “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, in combination with their respective duties tests, at identifying exempt employees? If so, what mechanism should be used for the automatic update, should automatic updates be delayed during periods of negative economic growth, and what should the time period be between updates to reflect long term economic conditions?”

The full RFI is available at: https://www.federalregister.gov/documents/2017/07/26/2017-15666/request-for-information-defining-and-delimiting-the-exemptions-for-executive-administrative.

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