Editor’s note: The DOL rule raising the minimum pay threshold to $913 a week to determine who had to be paid overtime was to have taken effect December 1, 2016. However, 21 states and a number of business organizations sued to stop the rule. A federal judge in Texas issued a temporary injunction, which the government appealed to the 5th Circuit, where the case is currently pending.
Today, the U.S. Department of Labor will publish its anticipated Request for Information on the White-Collar Overtime Exemption in the Federal Register. The RFI will give the regulated community 60 days to provide its comments in response.
The RFI seeks input on a wide variety of topics, many of which involve issues that have been raised since the Department published its final rule increasing the salary threshold (for determining what workers must be paid overtime) over a year ago. With the salary level on hold, the Department has the opportunity to revisit the level – or at least to take the temperature of the regulated community.
The issues on which the Department seeks comment are:
- 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?
Of course, the value of these responses ultimately is dependent on the Fifth Circuit’s decision on whether the salary test is permissible to begin with. Should the Fifth Circuit rule in the Department’s favor on that issue, the RFI responses will provide the Department with the information it needs to proceed on a new rulemaking adjusting the salary level — assuming the employer community responds.
This was originally published on Seyfarth Shaw’s Wage & Hour Litigation Blog