NARI ON THE HILL: MAY 2016
The Department of Labor’s White Collar Overtime Rules Are Here: An Increase in the Minimum Salary, but No Changes to the Duties Test
The following article was written by James Boudreau and Adam Roseman of Greenberg Traurig LLP. Greenberg Traurig is the lobby firm that represents NARI in Washington, DC
The Department of Labor (DOL) released its much anticipated Final Rule revising its amended white collar overtime regulations at an event in Columbus, Ohio.
The final rule includes a few changes from the Proposed Rule, and to the extent that companies were changing practices to comply with the Proposed Rule in anticipation of the Final Rule, there are a few matters of note.
First, the Final Rule increases the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (FLSA) white collar exemption to $47,476 per year ($913 per week). Although nearly double the current minimum salary threshold of $23,660 per year ($455 per week), it is slightly lower than the $50,440 minimum salary set forth in the Proposed Rule. In other words, there is a little more room for employers, also aided by the fact that the Final Rule permits employers to include bonuses and other incentive payments up to 10 percent when determining compliance with the new minimum salary requirement. Moreover, no one will be waiting another 20-plus years for updates to the minimum salary threshold. It will now be updated every three years and tied to the salary of the 40th percentile of full-time salaried workers in the lowest wage region of the country, currently the Southeast.
Second, many feared little time to implement workforce changes in response to the Final Rule. The DOL responded to such concerns, setting an implementation date of Dec. 1, 2016. This is far longer than the traditional 60-day implementation period that many had feared.
Finally, the Final Rule does not include any changes to the duties tests of any of the white collar exemptions. The DOL considered turning back the clock and adding a quantification component similar to California’s duties test that would have required employers to show an employee was performing exempt duties for a certain percentage of time to qualify under the specific exemption, but ultimately declined to make any such changes.
Impact on Employers
Employers have known for months that changes regarding the white collar exemption were all but certain but employers now know the exact parameters of the changes.
Although employers can breathe a sigh of relief that the DOL decided not to change any of the duties tests to meet the white collar exemptions, the increase in the minimum threshold salary required to qualify for the FLSA’s white collar exemptions will likely have a substantial effect on employers, particularly in retail and service industries. Indeed, employees whose salaries are between the old minimum salary to qualify for a “white collar” exemption under the FLSA ($23,660) and the new minimum salary ($47,476) yet meet the relevant duties test will no longer qualify for a white collar exemption.
With the final rule becoming effective Dec. 1, 2016, employers should act quickly and consult with counsel in order to ensure compliance.
Possible Progress on the Comprehensive Energy Bill
Last month the Senate passed its comprehensive energy bill, S. 2012, the Energy Policy Modernization Act. For a while it looked like the Senate was never going to be able to pass its bill and then a breakthrough in behind the scenes negotiations allowed the measure to come to the floor and pass with a strong bipartisan vote. Since the House of Representatives had passed its own energy bill last year, hopes were high that both chambers would be able to work out their differences and bring back a final product that could be signed into law. NARI has been an active participant in the Energy Efficiency Coalition and the SAVE Act Coalition, which have both been following and advocating for this legislation for several years.
Each week the Energy Efficiency Coalition has a conference call to report on various energy efficiency measures and to coordinate strategy among the many different groups involved. Unfortunately, after the call last week, the outlook for a final energy bill was grim. While Senators on both sides of the aisle continue to push for completion of the bill, there did not appear to be as much interest in finalizing a bill on the House side, especially among House Republicans. In particular Members of the so called “tea party” movement were making demands and refusing to negotiate. This group has drawn firm lines on issues with real or imagined budget impacts. However, on the Coalition call this week there was a bit more optimism. Reports came back from the House that said moving slowly was not necessarily a bad thing -- it meant they were moving purposefully and thoughtfully. This process is important because for the conference process to result in success it needs to produce a bill that can pass both chambers and be enacted by the President.
So, you never know in Congress. Just like the Senate bill “came back from the dead,” it is possible for a breakthrough to occur and for Congress to pass comprehensive energy legislation before the end of the year. NARI will continue to join with its partners on the Energy Efficiency Coalition to advocate for this bill.
Save the Dates!
2017 NARI Goes to Washington Fly-In
March 14-15, 2017
More information to come.