FLSA Overtime Regulations in the Home Stretch Now
Author: Michael Cardman, XpertHR Legal Editor
March 15, 2016
The long-awaited Fair Labor Standards Act (FLSA) overtime regulations have cleared one more hurdle on their way to finally taking effect.
The US Department of Labor (DOL) on March 14 sent its FLSA regulations to the Office of Management and Budget (OMB) for a final review, which is the next-to-last step in the regulatory process before they are published in the Federal Register.
The OMB has up to 90 days to finish its review, meaning the regulations could be published as late as mid-June. The effective date may be no sooner than 60 days after publication.
This timeline makes it unlikely that the regulations would be overruled by Congress, as President Obama would remain in office to veto any joint resolution issued under the Congressional Review Act.
The draft regulations issued last year would more than double the minimum salary for an employee exempt from the FLSA's overtime requirements from $23,660 to $50,440.
The minimum salary would be adjusted each year by a method yet to be determined. Either it would be set at the 40th percentile of earnings for full-time salaried workers across the nation or it would be adjusted based on the rate of inflation. The former approach would keep the proportion of employees who are FLSA-exempt fairly constant over time, while the latter would keep exempt employees' buying power constant over time, according to the DOL.
The DOL is also considering whether to permit nondiscretionary bonuses and incentive payments to count toward a portion of the minimum salary level.
The proposed regulations did not include a "bright-line duties test," as the DOL had been considering. Such a test would have required that employees spend a certain proportion of their time, say 50 percent or more, performing exempt duties to qualify for an overtime exemption. However, the DOL specifically asked the public to comment about whether changes to the duties test are warranted - suggesting that it may yet include a duties test in its final rule.