As all employers should know, on December 1, 2016 the Department of Labor’s (DOL) final overtime regulations under the Fair Labor Standards Act (FLSA) become effective. The FLSA requires that all non-exempt workers be paid overtime pay at the rate of time and one-half of their regular hourly rate for all hours worked over 40 in a work week. “White collar” workers are exempt from the overtime pay requirements if they fall into certain enumerated categories, the most common being the executive, administrative and professional exemptions, and meet minimum pay thresholds. Currently, such employees must earn a minimum salary of at least $455.00 a week. As of December 1, 2016, that minimum salary threshold will increase to $913.00 per week, or $47,476.00 annually.
Recently, several groups have filed lawsuits against the DOL to thwart, or at least delay, enactment of the overtime regulations. On September 20th, 21 states filed suit against the DOL in the United States District Court for the Eastern District of Texas seeking to have the final regulations set aside. On the same day and in the same court, a consortium of business groups led by the Plano Chamber of Commerce filed a similar lawsuit. Both suits claim that the final regulations violate the FLSA inasmuch as the FLSA does not set forth a minimum salary threshold. The suits also contend that the provision of the final regulations automatically readjusting the salary threshold every three years violates the Administration Procedures Act. Lastly, the states contend that the final regulations violate state sovereignty. The DOL has not yet responded to the Complaints, nor has the court taken any action.
In addition to the lawsuits filed in federal court, both houses of Congress have introduced legislation to delay the effective date of the overtime regulations. Legislation has also been introduced to phase in overtime regulations and raise the salary threshold gradually over the next several years. While one such bill has passed the House of Representatives, the Senate has not yet passed a bill and many observers expect that the president would veto any such bill that comes across his desk.
Given that neither the court nor Congress has yet taken any measure to delay implementation of the new overtime regulations, employers should proceed under the assumption that the regulations will take effect on December 1, 2016. If they have not already done so, employers must immediately evaluate which workers are appropriately classified as exempt under the white collar exemptions, and determine whether adjustment of compensation or their work force is required.