NEW YORK, NY — In 2016, 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. So much so, that a federal judge in Texas blocked the rule 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.
What Are Employees Entitled To Under FLSA And The Final Rule?
While the Final Rule will be changing which workers will be eligible to receive overtime benefits, the benefits themselves will remain unchanged. The primary overtime benefit is the payment of at least “time-and-a-half,” or 1.5 times standard pay rate, for each hour an employee works beyond 40 hours. This policy applies to salaried workers whose earnings fall below the overtime salary threshold – which has been raised with the passing of the Final Rule.
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. Overall, 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 a 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 Others argued that the 2004 rate was outdated and ineffective.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.
Does The Current Salary Threshold For The Final Rule Include Other Compensation?
While the Final Rule gives employees a great deal of power to pursue overtime pay benefits, it does include a provision that grant employers some flexibility. This flexibility comes in the form of an employer being able to use non-discretionary bonuses, incentive pay, and commissions to meet the EAP salary threshold. Non-discretionary bonuses differ from discretionary bonuses as they are promised to an employee to incentive them to work more efficiently or stay with the company.
However, there a several stipulations that restrict just how much flexibility is offered to employers. These stipulations are as follows:
- Payments must be made on – at minimum – a quarterly basis
- Payments may not exceed more than 10% of the required salary threshold
In the event that an employee fails to earn sufficient enough bonuses or commissions, they must receive a “true-up” payment immediately after the quarter ends to align their compensation with the salary threshold. If an employer fails to issue this payment to their employee, that employee would be eligible to pursue overtime benefits as laid out by the Final Rule.
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.
FLSA Overtime Lawsuits
Call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page if you believe that your wage rights are being violated under the FLSA. Our top-rated team of unpaid wage lawyers will evaluate your situation to determine your best course of action to help you seek justice.
Our office will also determine if it is in your best interest to file a lawsuit against your employer. Because strict time limitations apply for filing these types of claims, we advise you contact our experienced unpaid overtime wage attorneys at your earliest convenience and preserve your legal