The U.S. Government Wants Your Feedback on Overtime Pay

By: Lauren Mineau

The U.S. Department of Labor appears to be moving forward on an overtime rule that caught up millions of workers and employers in some muddy waters last year.

Under the Obama Administration, a new requirement had been expected to take effect would have required an additional 4 million American workers to be paid overtime if they worked more than 40 hours in a week.

Recently, the Department of Labor published a Request for Information from the public to gather information and questions on the rule. Here’s some background:

The federal government divides all workers into two categories: exempt workers, who are not required to receive overtime pay, and non- exempt workers, who must receive overtime pay. The exempt category covers employees who perform relatively high-level executive or professional work. Right now, you need to earn at least $23,660 a year to be considered exempt. The new rule would have raised that to $47,476 – making millions of workers non-exempt and thus eligible for overtime pay.

The last salary guideline was set in 2004, and it hasn’t been increased with inflation or changes in the economy. As a result, an increased number of people work long hours for a relatively low salary with no opportunity to earn overtime pay. Originally, this legislation was intended for skilled professionals but many employers use the law to stretch a dollar. A commonly referenced example is a retail manager earning a $30,000 yearly salary but  working 60-plus hours a week, with no chance for additional pay because they are exempt under the current rule.

The new salary level was scheduled to go into effect on Dec. 1, 2016. However, just one day before that, a Texas judge issued a temporary injunction to stop the hike. The judge found it likely that the Obama administration overstepped its authority by raising the cap. Many states and businesses sued against the rule, claiming it would cause financial harm.

Many employers had already prepared for the new worker classifications, but this decision left many in limbo. Since then, the new presidential administration has said that it won’t defend the new overtime rule in court.

Now, the Department of Labor is working on a new rule, likely based on the results of this public survey. It's also waiting for the Fifth Circuit Court of Appeals to confirm that it has the right to set that threshold at all.

Labor officials want feedback to the following questions and fast. The deadline to respond is September 25.[MM6] 

    "Should the 2004 salary test be updated based on inflation? If so, which measure of inflation?

    Would duties test changes be necessary if the increase was based on inflation?

    Should there be multiple salary levels in the regulations? Would differences in salary level based on employer size or locality be useful and/or viable?

    Should the Department return to its pre-2004 standard of having different salary levels based on whether the exemption asserted was the executive/administrative vs. the professional?

    Is the appropriate salary level based on the pre-2004 short test, the pre-2004 long test, or something different? Regardless of answer, would changes to the duties test be necessary to properly 'line up' the exemption with the salary level?

    Was the salary level set in 2016 so high as to effectively supplant the duties test? At what level does that happen?

    What was the impact of the 2016 rule? Did employers make changes in anticipation of the rule? Were there salary increases, hourly rate changes, reductions in schedule, changes in policy? Did the injunction change that? Did employers revert back when the injunction was issued?

    Would a duties-only test be preferable to the current model?

    Were there specific industries/positions impacted? Which ones?

    What about the 2016 provision that would permit up to 10% of the salary level to be satisfied with bonuses? Should the Department keep that? Is 10% the right amount?

    Should the highly compensated employee exemption salary level be indexed/how? Should it differ based on locality/employer size?

    Should the salary levels be automatically updated? If so, how?"

To answer, visit this page.