“It’s Deja Vue All Over Again” – The Newly Proposed Overtime Rules

The DOL has issued its much-anticipated proposed rule on white-collar overtime exemptions under the Fair Labor Standards Act of 1938 (FLSA). This rule replaces the prior Obama-era rule that has been enjoined by a federal court judge since 2016.The DOL’s proposed rule increases the annual salary threshold employees must meet to qualify as “exempt” from $23,660 to $35,308. In comparison, the Obama administration’s rule had increased the threshold from $23,660 to $47,476. The newly proposed rule’s preamble states that the threshold should be increased every four years, though unlike the Obama Administration rule that included an automatic adjustment mechanism, any adjustments under the DOL’s newly proposed rule would need to be made through the normal notice-and-comment rulemaking process.In addition, the proposed rule increases the salary threshold for “highly compensated employees” from $100,000 to $147,414. Highly compensated workers are exempt from overtime requirements if their salary meets the threshold and they meet a minimal duties test as follows:
(1) The employee’s primary duty includes performing office or non-manual work, and(2) The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.
Three weeks after issuing the above proposed rule, the DOL issued yet another proposed rule related to FLSA overtime — this one pertaining to how the “regular rate of pay” is calculated. The DOL currently maintains numerous rules on “regular rate,” which define the forms of payment employers include and exclude in the “time and one-half” calculation when determining workers’ overtime rates. Per the DOL’s press release: “The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits, or other miscellaneous items must be included in the regular rate. Because these regulations have not been updated in decades, the proposal would better define the regular rate for today’s workplace practices.”The DOL’s proposed rule removes the following payments from those included in determining the employee’s “regular rate”:

  • the cost of providing wellness programs, on-site specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  • payments for unused paid leave, including paid sick leave;
  • reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  • reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements;
  • discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary;
  • benefit plans, including accident, unemployment, and legal services; and tuition programs, such as reimbursement programs or repayment of educational debt.

The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods, “call back” pay, and others.
More information regarding the proposed rule can be found at 
www.dol.gov/whd/overtime/regularrate2019.htmMembers of the public may now submit comments regarding the DOL’s proposed rules. The public has until May 21, 2019, to submit comments regarding the white-collar exemptions rule and until May 28, 2019, to submit comments concerning the “regular rate of pay” rule.

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