Is the tide turning for Employers? There seems to be some good news on the horizon.
The United States Department of Labor (DOL) appears to be contemplating changes that may help employers in the future on a few different topics including the salary requirement for employees who classify for federal overtime. The DOL requested information on July 27, 2017 related to the exemption for employee minimum wage and overtime pay. The request for information is an opportunity for the public to provide information that will help the DOL in formulating a proposal to revise related regulations.
The Fair Labor Standards Act (FLSA) requires employers who do more than $500,000 in annual sales and are engaged in interstate commerce to pay their employees at least the federal minimum wage which is currently $7.25 per hour for all hours worked. In general, interstate commerce refers to the sale, purchase or exchange of goods or money, or transportation of people or navigation of water between different states. If the state where the employee resides has a minimum wage higher than $7.25 per hour, then that state’s minimum wage will apply with a few exceptions not discussed here. The FLSA also requires employers to pay their employees premium pay of time and a half for hours worked over forty in seven consecutive days. Some of the law surrounding federal minimum wage and overtime can be found on the United States Office of the Law Revision Counsel’s website including 29 USC 206 and 29 USC 207.
The FLSA exempts from both the federal minimum wage and overtime laws employees employed in a bona fide executive, administrative, or professional capacity, and expressly delegates to the Secretary of Labor the power to define and delimit these terms through regulation. These exemptions have been defined for over 75 years using three criteria; including, (1) the employee must be paid on a salary basis; (2) the employee must receive at least a minimum specified salary amount; and (3) the employee’s job must primarily involve executive, administrative or professional duties. 29 CFR part 541.
One of the more recent changes by the DOL occurred in 2016 and set the standard salary at a level, that if implemented, would exclude from exemption the bottom 40 percent of salaried workers in the lowest-wage census region, resulting in an increase from $455 per week to $913 per week. The result of this rule would mean an increase in those persons eligible for overtime or the minimum wage. The DOL also established a mechanism for automatically updating the salary level every three years. The effective date was supposed to be December 1, 2016;however because of recent litigation in the Fifth Circuit Court of Appeals the DOL has instead solicited information from the public to determine what the minimum salary level.
