Push to Keep the New Overtime Rules at Bay

Employers nationwide have been fretfully awaiting the Department of Labor’s proposed new overtime regulations.  The final rule implementing them is anticipated at any time. The proposed changes would significantly impact employers and their employees, specifically those classified as “exempt” under the FLSA.  The new regulations would increase the federal minimum salary requirement for an exempt employee from the current rate of $23,660 annually to $50,440. It would also increase the minimum salary requirements for Highly Compensated Employees from $100,000 annually to $122,148 annually. Additionally, mechanisms for automatic increases in salary and compensation levels would be put into place, along with clarifications to the “exemption tests.” These proposed changes may prove to be especially challenging for California employers who just recently had to adjust to the new exempt minimum salary requirement increase of $41,600 annually, after the state minimum wage increased to $10.00 per hour on January 1, 2016.

While many have braced themselves for these changes as a near inevitability, there may be hope on the horizon. On March 17, 2016, House and Senate Republicans submitted a bill that would essentially block the new regulations and require a thorough and comprehensive economic analysis of the potential impact of such drastic changes to overtime rules on private businesses, non-profit organizations and public employers. The bill includes a prohibition on automatic increases to the salary threshold, while also requiring that any changes to the exemption duties tests be posted and available for comment prior to implementation.

Although there is much uncertainty with what the final outcome might be, the wait is sure to be brief as supporters of both sides rush to push their agendas.