Overtime Update: Will the Texas Decision Invalidating the DOL Overtime Rule Survive and What Should Employers Do Now?

By Kenneth M. Bello

Now that a federal judge has issued a preliminary injunction staying implementation of the new DOL regulations revising salary thresholds for determining application of the white collar minimum wage and overtime pay exemptions, otherwise slated to go into effect on December 1st, what happens next, and how quickly will that occur?  Here are the possibilities.

  • An interlocutory appeal to the 5th Circuit Court of Appeals. How that comes out is anyone’s guess, but the case is vulnerable in its analysis, as detailed below.
  • Congressional Action that renders the decision academic. On September 28, 2016, the House of Representatives passed H.R. 6094, titled Regulatory Relief for Small Business, Schools, and Nonprofits ActThe bill would have changed the effective date of the revised overtime regulations from December 1, 2016 until June 1, 2017.  With a Republican majority in both the House and Senate, there is a very real possibility that some form of law will be filed and passed in 2017.  The question of course is what will that bill look like – for examples, will it exempt “small business”, and will it change the minimum salary amounts and/or remove automatic indexing?

Read more

DOL Overtime Rule Stopped: Nationwide Injunction Issued by Texas Judge

In a last-minute, and therefore surprising, decision issued today, a Texas Federal District Court judge has blocked enforcement of the revised federal overtime rule set to become effective December 1, 2016.  The rule, issued by the federal Department of Labor, would require employers to pay a salary of at least $913 dollars per week (equivalent to $47,476 per year), to most employees treated as exempt from overtime pay under the Fair Labor Standards Act, a significant increase over the current $455 per week ($23,660 annually).  The ruling came in response to cases filed in the last several weeks by certain groups of states, and the decision to issue the injunction has surprised some commentators.

Despite being issued by a single Texas trial court judge, the injunction ostensibly has nationwide effect, and completely prevents the DOL from enforcing the revised rule, just days before it was scheduled to take effect.  It remains to be seen whether an immediate appeal will follow, and ultimately whether the injunction will be upheld.  Employers that have not already implemented changes to employee pay or classifications will need to make decisions regarding whether to go ahead with changes in the face of this uncertainty.  We will continue to provide updated analysis and will be available in the coming days to discuss these developments with any clients seeking guidance in making these decisions.

 

Update on DOL changes to FLSA White Collar Exemptions

By Alexandra D. Thaler

As we previously reported here, the Department of Labor will soon be revising the so-called “white collar exemptions” to the Fair Labor Standards Act (FLSA).  Recently, the DOL has indicated that it now plans to issue the Final Rule in July 2016.

To recap, on June 30, 2015, the DOL issued a detailed report and proposed rule, inviting the public to submit comments through September 4, 2015.  The agency has received nearly 300,000 comments to date, underscoring the intense interest the proposed changes have garnered across diverse stakeholder groups. Read more

State Wage Penalties Available for Non-Payment of Federal Overtime

By Kenneth M. Bello and Louise Reohr

A recent case highlights the need for Massachusetts’ employers to tread carefully around the so-called Wage Act, M.G.L. c. 149, § 148.  Under this law, an employee who successfully makes out a claim for non-payment of wages “shall be” awarded automatic treble damages together with litigation costs and attorneys’ fees.  Unlike the FLSA which permits the award of double damages as a liquidated remedy, the treble damages provision of the MA Wage Act is automatic, regardless of any good faith by the employer.  While there remain arguments automatic treble damages is an unconstitutional punitive remedy, to date there is no definitive state court ruling on such a challenge.  Read more

DOL Issues Proposed Updates to FLSA White Collar Exemptions

By Alexandra D. Thaler

On June 30, 2015, the Department of Labor issued its anticipated update to the so-called “white collar exemptions” to the Fair Labor Standards Act (FLSA).   The proposed rule more than doubles the minimum weekly salary threshold for the application of the Executive, Administrative, Professional, and Computer Employee overtime exemptions, and ties the rate to annual data on national wages for full-time salaried employees.  The rule would increase the minimum salary for exempt employees from the current $455 per week, or $23,660 annually, to an estimated $970 per week, or $50,440 annually when the final rule issues, likely in 2016.  The proposed rule would also increase the minimum compensation required to qualify for the Highly Compensated Employee exemption, from $100,000 to $122,148 annually based on current data, also tethered to annual wage rates.  The regulations do not change the optional hourly payment method for qualifying computer employees, which would remain at $27.63 per hour and would not be tied to changes in national wage data.

While the proposed rule does not currently include changes to the duties tests that also must be met for each exemption, in its 285-page statement accompanying the draft rule, the DOL advises that it is considering possible changes to the duties tests, and invites comments on these and other aspects of the exemptions.  For example, the DOL seeks comment on whether the duties tests “are working as intended to screen out employees who are not bona fide” exempt employees, specifically, whether employees should be required to spend a minimum amount of time performing “primary duty” work, whether the single standard duties test for each category is appropriate, and whether the “concurrent duties” regulation should be modified to prevent exempt-classification of otherwise nonexempt employees.  The Department also seeks comments on various other issues relating to the exemptions, including whether the national wage data methodology is appropriate, whether employers should be permitted to credit certain payments, such as non-discretionary bonuses and commissions, toward the salary requirement, and whether any additional occupational titles or categories should be included in the regulations regarding computer and information technology sectors.

In the short term, the rule is expected to affect nearly 5 million workers who currently make less than the proposed $50,440 annual salary threshold.  Still more will be impacted by the increase in the Highly Compensated Employee salary level.  The ultimate impact of the new rule remains unclear, with some economists predicting that workers’ hours, and ultimately wages, will go down to compensate for the changes.   The DOL will accept the public’s comments on the proposed rules, which can be submitted in writing or online until September 4, 2015.  All comments are made available online at http://www.regulations.gov.

New Beginning

I discovered the joys of blogging in 2009, when I helped launch an employment law-related blog at another firm.  I recently joined Bello/Welsh, LLP, a boutique labor and employment law firm, where I am excited to be launching our new blog.

Our primary goal here at WorkLawBlog (worklawblog.net) is to educate you about interesting developments in labor and employment law (and our firm).  If we can entertain you along the way, all the better.

On to business… much has happened recently.

  • The Department of Labor issued a final rule extending the Fair Labor Standard Act’s minimum wage and overtime protections to direct care workers who provide home care assistance to elderly people and people with illnesses, injuries or disabilities.   Companionship workers, or individual workers who are employed only by the person receiving services or that person’s family or household and engaged primarily in fellowship and protection and care incidental to such activities, will still be considered exempt from the FLSA’s minimum wage and overtime protections.  You can access the DOL’s press release here.
  • The National Labor Relations Board launched its first mobile app, available free to iPhone and Android users.  According to the NLRB’s press release, the app provides information for employees, unions and employers- whether unionized or not- with information about their rights and obligations under the National Labor Relations Act.  The NLRB joins the DOL’s Wage and Hour Division and the Occupational Safety & Health Administration, both of which have already launched apps.  Click here for the WHD timesheet app and here for OSHA’s heat index for outdoor workers safety app.

And last (for now), but certainly not least…

  •  A NY federal court judge has ruled that Lady Gaga’s former personal assistant is entitled to have a jury decide her claim for unpaid overtime.  According to the former assistant, she was required to be on-call 24/7 and should be paid nearly $400,000 for 7,000 of overtime hours, worked over the course of 13 months.