Employers Worry about Changing Overtime Exemption

EXEMPAttorneys who represent employers are worried the U.S. Department of Labor will issue a final proposal that will change the so-called “white collar exemptions” for overtime with respect to workers’ duties without giving employers the opportunity to comment on the issue first.

The Labor Department’s wage-and-hour division on Tuesday announced its long-waited proposal to amend the white collar exemption for executive, administrative and professional employees, but focused only on the salary levels required for the exemption, not the job duties.

Under the proposal, in 2016 the salary level to be exempt from paying overtime would be $970 per week, or $50,440 per year, compared with the current annual salary of $23,660.

To be exempt from employers having to pay them overtime, workers must qualify under both their salary levels and job duties. There are three categories of job duties: executive, administrative or professional duties.

For instance, to qualify under the executive exemption, under FLSA regulations an employee must regularly direct the work of at least two employees, among other requirements.

Experts say that rather than issuing a firm proposal on changing job duties, the DOL only seeks comments on related issues, such as what, if any, changes could be made to the duties tests, and whether employees should be required to spend a minimum amount of time performing work that is their primary duty to qualify for exemption.

But employment law attorneys are concerned there will be changes in job duties that will be reflected in its final proposal, which is expected next year.

“It’s a less transparent way to go about things than they’re doing with the salary level,” with the formal proposal issued Tuesday, said Douglas A. Hass, an associate with law firm Franczek Radelet P.C. in Chicago.

If the intention is to change the duties requirements, “employers should be given the opportunity to see what the changes are and comment on them, and it doesn’t seem from its notice the DOL plans to do this.”

Lisa A. Schreter, Atlanta-based chairman of Littler Mendelson P.C.’s board of directors, said she hopes the DOL would not change the job duties without first allowing employers to comment on a proposal, but she is concerned this will nevertheless happen. The department has “done this before” on other issues, she said.

There’s been a tremendous amount of litigation “involving employees claiming they’re misclassified as exempt, a lot of that driven by class action lawyers and not so much by the employees themselves,” Ms. Schreter said.

A DOL spokesman could not immediately be reached for comment

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