Holy Toledo – What’s an HR Professional to Do?

Unless you’ve been living under a rock, you know that the new Fair Labor Standards Act (FLSA) salary threshold of $47,476 goes into effect on December 1, 2016.  Or does it?  While the likelihood of any action derailing the freight train coming out of the Department of Labor (DOL) is small, here is some of the activity currently going on in opposition to the new regs intended to be effective December 1:

  • The House of Representatives passed H.R. 6094 on September 28 that would delay by six months the effective date of the new overtime regulations. A driver of the legislation was the argument by small businesses that they would be forced to implement layoffs. The University of Michigan has announced it is increasing tuition by 4% because of the new threshold.  The delayed effective date would be June 1, 2017.
  • The U.S. Chamber of Commerce filed a lawsuit on September 20 as part of a coalition of business groups. The lawsuit argues that the new salary threshold is “indefensibly high” by using methodology that has not been used before by the DOL, and that by tying inflation statistics to the three-year automatic update, the DOL acted outside its allowed constitutional powers under the FLSA.
  • Twenty-one state governments filed a lawsuit, also on September 20, led by the Texas and Nevada attorneys general. The suit argues that the DOL’s rule infringes upon state sovereignty and federalism by mandating state employees follow the federal compensation requirements.  The suit alleges states will be forced to cut back on public services if the rule goes into effect.  The states also argue that elevating the salary threshold over the duties test does not follow the intent of the FLSA, which historically treats both provisions equally.  From the suit: “One would think – as the statute indicates – that actually performing white-collar duties…would be the best indicator of white-collar exemption status.”  Yes, wouldn’t one? (editorial comment) The suit further states that the mandate of indexed adjustments to the salary threshold is unlawful.
  • Democrats in the House of Representatives introduced legislation (R. 5813, Overtime Reform and Enhancement Act) to phase in implementation of the new overtime rule. The proposed legislation would raise the new threshold incrementally over the next three years, beginning with a 50% increase in December 2016, to an annual salary of $35,984.  In subsequent years, the threshold would increase to $39,814 (2017), $43,645 (2018), and $47,476 (2019).  The bill also prohibits the automatic increases in the final rule.  The bill has strong bipartisan support.
  • The Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773) was introduced March 17 and would nullify the final rule, require a comprehensive economic analysis of the rule’s impact, prohibit automatic increases to the salary threshold, and require that any future changes to the duties test be subject to notice and comment periods.
  • Senate bill S. 3429 to delay implementation of the overtime rule.
  • Resolution 95 and S. Joint Resolution 34, providing for congressional disapproval of the new FLSA rule.

While most consulting firms and employment attorneys are recommending employers proceed with plans to accommodate the new regs, a few are suggesting a ‘wait-and-see’ attitude.  Clearly, the timeline is pretty tight for that.

Is your company prepared to act?

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