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Major revisions to federal overtime exemptions are one step closer to taking effect, and sooner than you may have expected

The United States Department of Labor’s long-anticipated revisions to the Fair Labor Standards Act’s (FLSA) overtime regulations may become effective sooner than expected. The Department announced on March 14, 2016 that it submitted its final overtime rules to the Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget. Once OIRA signs off on the final rules, publication could take place as early as April or May. The Department of Labor previously estimated publication would take place in July of 2016. 

The final rules are expected to significantly change the FLSA’s so-called “white collar” exemptions from overtime pay. The anticipated changes likely will include a doubling of the minimum salary needed to qualify for these exemptions (from $23,660 to approximately $50,000) and may include changes to how exempt job duties are defined under the FLSA. 

Compliance with the revised regulations could create significant issues for employers. Once the final rules are published, Congress will have an opportunity to disapprove them through a resolution within two months of publication, but (at present) that would almost certainly draw a presidential veto. Assuming Congress is unable to prevent the final rules from going into effect, employers likely will have only a few months after publication to bring their pay practices into compliance. 

Employers that may be affected by the final rules should begin reviewing their wage and hour policies and practices now to get ahead of the curve. The results of such a review may require employers to raise certain employees’ compensation to meet the new salary threshold or reclassify parts of their workforces as overtime eligible where previously classified as exempt. While it is unknown what exact changes eventually will be included in the final rules, it is now clear that the publication of the final rules is imminent.

  • Matthew E. Radler
    Partner

    Matthew Radler is a labor and employment attorney who focuses his practice on wage and hour matters and assists in litigating noncompete, trade secret and employment dispute matters.

    • Counsels clients through various stages of ...
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