Key Takeaways from the Recent Overtime Rule Listening Sessions

November 28, 2018 - Christine Gantt-Sorenson

The Wage and Hour Division of the U.S. Department of Labor (DOL) held public listening sessions on October 30, 2018 to gather views on the Part 541 white collar exemption regulations, the 2016 “Overtime Rule.”

Sessions were held in Atlanta, GA, Seattle, WA, Kansas City, MO, Denver, CO, Providence, RI, and Washington DC. A review of the actual transcripts reveals that many different interests presented comments, including human resource professionals, small business, nonprofits, employees, employers, attorneys, and large businesses. Full renditions of the transcripts by city can be found here.

The DOL posed these questions for addressing at the Listening Sessions:

  • What is the appropriate salary level (or range of salary levels) above which the overtime exemptions for bona fide executive, administrative or professional employees may apply?
    • Why?
  • What benefits and costs to employees and employers might accompany an increased salary level?
    • How would an increased salary level affect real wages (e.g., increasing overtime pay for employees whose current salaries are below a new level but above the current threshold)?
    • Could an increased salary level reduce litigation costs by reducing the number of employees whose exemption status is unclear?
    • Could this additional certainty produce other benefits for employees and employers?
  • What is the best methodology to determine an updated salary level?
    • Should the update derive from wage growth, cost-of-living increases, actual wages paid to employees or some other measure?
  • Should the Department more regularly update the standard salary level and the total-annual-compensation level for highly compensated employees?
    • If so, how should these updates be made?
    • How frequently should updates occur?
    • What benefits, if any, could result from more frequent updates?

Brief summaries of some of the points made by the attendees are:

  • Most agreed the minimum salary basis amount should be raised because the minimum level is no longer sufficient for workers to meet their basic needs in most areas.
  • The minimum threshold of $44,700 is too high. Lower minimums should be implemented for the southern regions (with exceptions for urban areas like Atlanta or Orlando).
  • The compliance costs were too high for small businesses whether at exempt-minimum salary level or required overtime for those exempt employees moved to non-exempt classification.
  • Impact from changes implemented in anticipation of compliance included reclassifying exempt employees to non-exempt status which resulted in loss of benefits they were previously entitled and requiring them to clock-in and out for positions that don’t lend themselves to that level of time tracking, lowering employee morale; interference with business development or operations activities outside of normal work hours (such as community involvement projects, customers in different time zones, checking email or voicemail after hours) that are required for some business operations; and position eliminations, decrease in promotions or reduced work hours.
  • Automatic increases don’t take into consideration the fluctuating business climate from year to year and should be considered through use of the Notice of Proposed Rulemaking (NPRM) process each time increases are regulated, as was the case when the 2004 amendments were promulgated.
  • The duties test should be retained with the salary test as the gatekeeper.
  • Inside sales should be considered exempt because those areas are growing due to technology and business climate.
  • Technology has advanced beyond programming and other job categories in existence when the duties tests were modified in 2004 and should be updated because the wide variety of technology-based positions do not properly fit in any current exempt classification.

Note: The regulations reflect the 2016 amendments but the Department clarified during the meeting it is enforcing the 2004 amendments, not the 2016 amendments.

Read more about the Overtime Rule and other employment law matters on our employment blog.

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