Back to the Drawing Board: the Trump Labor Department Seeks Public Comment on FLSA Overtime Exemption Regulations

On July 26, 2017, the U.S. Department of Labor opened a 60-day public comment period aimed at obtaining information to assist it in formulating new proposed revisions to the Fair Labor Standards Act (FLSA) overtime exemption regulations. According to the Request for Information (RFI) issued by the Department on that date, the agency is seeking feedback on 11 sets of questions. These involve the following general topics:

• The salary level tests for the executive, administrative and professional (EAP) overtime exemptions,
• Possibly including non-discretionary bonuses and incentive payments to satisfy part of these salary levels,
• The salary test for the FLSA’s highly compensated employee exemption,
• Varying cost-of-living across different parts of the U.S., and
• Automatic updating of the salary level tests. 

All of the above topics were addressed to some extent by the now-invalidated Final Rule on overtime that was completed during the last months of the Obama administration. The Department’s questions express interest in conducting a detailed re-evaluation of the Final Rule’s provisions, particularly issues such as these:

• Whether to simply eliminate the salary level test and rely solely on a duties-only test for the EAP exemptions?
• If a salary level test is retained, how should the salary amount be established? And should it vary by exemption type, employer size, location, etc.?
• Whether, and to what extent, to allow non-discretionary bonuses and incentive payments to satisfy part of a minimum salary level?
• Should salary level standards “be automatically updated on a periodic basis to ensure that they remain effective, in combination with their respective duties tests, at identifying exemption employees?” If so, what time periods and mechanisms should be used, and should updates be delayed during periods of negative economic growth?

The RFI comment period closes on September 25, 2017. In considering whether to take the time to voluntarily comment about any of the above topics, Washington employers should remember they cannot use the FLSA’s highly compensated employee exemption from overtime pay requirements because Washington state law does not provide any parallel exemption. (Where federal and state laws differ, employers must follow whichever law’s standards are more favorable to the affected employees.)

The RFI states DOL’s intent to use responsive public input in developing a Notice of Proposed Rulemaking as the law requires. Stakeholders should not expect rapid changes in the white-collar overtime exemptions: the rulemaking process can take a year or more, and recent events illustrate that subsequent court challenges can consume many months, even when expedited processes are used. See our related post about the invalidation of the Final Rule.

Karen Kruse has been involved in applying the FLSA's overtime exemptions since her pre-law days with the State of Alaska, when the U.S. Supreme Court decided in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), that public employers must comply with the FLSA's overtime pay requirements.