Wage & Hour Law Update
In March 2014, President Obama directed the DOL to “modernize and streamline” the DOL’s so called “white collar” overtime exemption regulations. The proposed changes were designed to impact the scope of the executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act (FLSA). The proposed changes, once enacted, would have broadened the range of employees entitled to overtime and should have disposed of some of the ambiguity in the current regulations regarding which employees may be exempted. Unfortunately, many people still need a job discrimination lawyer employees can turn to when they are discriminated against.
At the time the proposed changes were made, the overtime regulations only required employees to be paid $455 per week to meet the salary requirement of the white collar exemptions. The salary requirement has only been raised twice in the last forty years. In 1975, the threshold was increased to $250 per week. At that point, 65% of salaried workers were under the threshold, and the threshold was equivalent to more than twice the poverty line for a family of four.
In 2004, the threshold was increased again to the current rate of $455 per week. At that point, 18% of salaried employees were under the threshold. Today, 12% of salaried employees fall under the threshold, which amounts to a salary below the poverty line for a family of four.
The final DOL rule, which was to take effect December 1, 2016, would have required employees to receive a salary of $913 per week, or $47,476 annually, to meet the salary requirement of the professional exemptions. In 2016, shortly after Trump’s election, a federal court in Texas issued a preliminary injunction temporarily barring the Department of Labor from implementing the salary increase. Under the Trump administration, the salary threshold increase may never come to pass.
Implications of the proposed salary regulation changes on wage and hour practice and litigation
- Increased employee awareness of wage laws as a result of news coverage.
- Employees seeing their pay method change from salary to hourly or vice versa (e.g., employees switched from salaried to hourly become aware they may have been entitled to overtime during their salaried tenure).
- National attention prompts small and medium sized employers to take a hard look at their wage practices for effected employees.
- Like in 2016, employers may make changes in anticipation of the new salary regulations taking effect.
- Possible long-term downtick in wage and hour litigation.
- Bright-line salary requirements may cause smaller and medium size employers, the primary violators of the FLSA overtime provisions, to implement compliant pay provisions for workers with dubious exemption classifications.
- Potential elimination of gray areas in misclassification cases because most misclassification litigation involves workers earning less than $45k.
- Less FLSA litigation in the long run though there may be a short-term increase in litigation against employers slow to adapt to the new law.
Posted on February 21, 2018 @ 1:56 pm