2017 – we were all prepped and ready for a huge change to employee overtime compensation. To refresh your memory, in May of 2016, the DOL published new regulations that raised the minimum salary level needed to qualify for a white collar exemption from the overtime compensation requirements of the Fair Labor Standards Act (“FLSA”) from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). Over the summer of 2016 and with an uncertain political climate, many business owners took steps to analyze the effects of the change on their business and put execution plans in place. Then, in September of 2016, two lawsuits were filed, challenging the change.
Many, myself included, doubted whether the lawsuits, which were consolidated and assigned to Judge Amos Mazzant, a President Obama appointee, would have an impact. And, yet, just two days after the Nov. 22, 2016, Presidential election, and only a few days before the December 1st effective date, Judge Mazzant issued a temporary injunction blocking the rules implementation on Dec. 1. According to the Judge, the salary level set under the new rule was too high for exemption.
In the meantime, the Trump administration weighed in on the overtime rule following the institution of Alexander Acosta as Secretary of Labor. Secretary Acosta noted in his confirmation hearing that the rule was a “very large revision” that needed to be looked at closely. Specifically, the Trump administration indicated an intent to reexamine the overtime rule with a lower salary threshold that the 50% increase originally proposed.
Then, just in time for Labor Day of 2017, Judge Mazzant put an end to the Obama-era Department of Labor overtime rule tracked closely by business owners for several years.
What does this mean for business owners? It means that 2017 was not the year of change we thought it would be as it pertains to the FLSA salary level test. It means that the FLSA’s white collar exemption salary levels stand as is – more specifically, the salary level requirement remains at $455 per week.
But, for all of those who prepared, it was not for naught: I helped many clients review their payroll policies to ensure other areas of their compensation model were up to snuff. I also had the privilege of helping businesses review their job descriptions to demonstrate that the duties test of the FLSA was satisfied as it relates to exempt workers. Lawsuits under the FLSA are common and expensive. In 2018, you should resolve to protect your business by reviewing and revising your policies. If you have questions on how to properly document your payroll policies or compensation practices, please do not hesitate to contact me.[social_warfare]