In 2016, under President Barack Obama, the United States Department of Labor (DOL) finalized a rule, wherein, the minimum salary to qualify for the white collar exemptions to the Fair Labor Standards Act would be increased from $23,660 per year to $47,476 per year. However, that rule was met with harsh criticism from many employers across the country. Ultimately, the implementation of the rule was blocked by a federal judge in Texas after a lawsuit was filed seeking an injunction. Later, on June 27, 2017, it was announced that the Department of Labor Wage and Hour Division submitted a formal Request for Information (RFI) regarding the Obama era overtime rule to the White House’s Management and Budget. The RFI was subsequently published in the Federal Register, which provided employers, attorneys, and others the opportunities to supply comments regarding the proposed rule and the effect it will have.
Comment period on the Obama Overtime Rule is closed
The 60-day comment period on the Obama Overtime Rule closed on Monday, September 25, 2017. Approximately 165,000 commenters weighed in on the Overtime Rule. Across the board, the commentators seemed to agree the DOL did have authority to set the minimum salary threshold, which was something that was questioned by the federal Judge in Texas that granted an injunction, effectively blocked the rule. However, there was great divide in opinion regarding what the minimum salary should be. Many argued that it should remain at the 2004 rate of $23,660. Others argued that the 2004 rate was outdated and ineffective. Some commentators suggested that the rate needs to be adjusted annually to account for inflation.
Obama Overtime Rule provides a clear salary-level test
The New York Attorney General, Eric Schneiderman, argued on behalf of himself and nine other state attorney generals that the DOL should just adopt the Obama Overtime Rule because it provides for a clear salary-level test, which makes the enforcement of labor laws must more efficient.
There are essentially two methodologies on the table for discussion. Some advocate for a duty based analysis of the employee’s work to determine their eligibility or non-eligibility for overtime benefits. Whereas, others believe that having a clear-cut salary requirement makes it far easier to administer and much less ambiguous to interpret whether an employee is overtime. The duties approach, they argue, requires one to venture too deep into the weeds to determine whether an employee should receive overtime benefits and can also lead to inconsistent outcomes.
One thing most commenters seemed to agree on is that one minimum salary level should be implemented, not different varying levels to reflect the geographic location of the employee. Providing different minimum salary requirements based on the geographic location would surely lead to confusion in a workplace that is evolving and blurring the lines of where the employee is employed. Today, more and more employees are working from home or from other locations outside the traditional office setting.
The AARP has argued that if the DOL does lower the salary threshold from the Obama-era proposal, then a more robust duties test will be needed to ensure that employees spend no more than 20 percent of their time on nonexempt activities, if they are to be considered exempt from overtime.