June 11, 2019
New Overtime Rule Faces Landmark Legislative Challenge
If Congress doesn’t like a Supreme Court decision, they can pass a new law. If they don’t like a federal regulation, they can do the same. Since the Fair Labor Standards Act (FLSA) was enacted in 1938, the minimum salary requirement to classify an employee as exempt has always been assigned to the Department of Labor (DOL) through the regulatory process.
Employers can properly classify an employee as exempt from the FLSA’s minimum wage and overtime requirements if the employee passes three “tests.” One is a minimum salary test. There are also salary basis and duties tests that must be met.
On March 7, 2019 the DOL issued a new overtime rule, proposing to increase the current minimum salary level of $455/week ($23,660/year) to $679 ($35,308/year). Some in Congress believe the proposed increase is inadequate.
So, on June 11th the House and Senate filed the “Restoring Overtime Pay Act of 2019,” proposing to reportedly increase the minimum salary to nearly $980/week ($51,000). As of this writing, the bills are not yet published by the Library of Congress but watch S. 1786 and H.R. 3197.
This is not the first time Congress has tried to legislative the minimum salary threshold. A similar bill was presented two years ago. For now, employers might begin to prepare by: (1) ensuring that all of your employees are properly classified as exempt under the current rules; (2) look at which employees might be impacted by an increase to the minimum salary threshold, whether it’s $35K or closer to $50K; (3) talk to your company’s legal counsel and consider engaging those employees in a conversation now about possible changes to their FLSA status, what that would mean and keeping them posted along the way. Reducing the element of surprise can go a long way in enhancing employee relations.
Will we see the overtime rule reformed through the regulatory or legislative process? Stay tuned as the debate continues!