On August 21, 2019, the U.S. Court of Appeals for the Fifth Circuit issued an opinion in Faludi v. U.S. Shale Solutions, L.L.C. that may prove to be an important decision for companies that utilize day rate compensation.1 The decision settled two important issues, concluding that: (1) a guaranteed day rate that provides compensation exceeding $455 can meet the Fair Labor Standard Act (“FLSA”) salary requirements for the white collar overtime exemptions, and (2) the FLSA’s reasonable relationship test does not apply to the highly compensated exemption.
Articles Discussing Overtime Exemptions Under The FLSA.
DOL to Publish “White Collar” Exemption Proposed Rule, Triggering 60-Day Comment Period
On March 22, 2019, the DOL’s Wage and Hour Division will publish in the Federal Register its proposed rule to revise the overtime exemption regulations for executive, administrative, professional, outside sales and computer employees.
DOL Proposes New Revisions to Overtime Exemption Rules
Executive Summary: The U.S. Department of Labor (DOL) recently issued its proposed overtime regulations to replace the Obama administration’s (enjoined) overtime rule. The DOL raised the minimum salary threshold requirement for workers to qualify for the Fair Labor Standards Act’s white collar exemptions to $35,308 per year (or $679 per week). The proposed rule raises the threshold from $23,660 per year (or $455 per week). For highly compensated employees, the DOL raised the salary threshold from $100,000 to $134,000. The proposed regulation would make more than one million additional workers eligible for overtime. The DOL also proposed regular increases to the threshold every four years following public comment.
DOL’s Proposed Overtime Regulations: A ComplianceHR and Littler Briefing
On March 7, 2019, the Wage and Hour Division of the U.S. Department of Labor published the long-awaited Notice of Proposed Rulemaking (NPRM) to revise the “white collar” overtime exemption regulations to $35,308. Issued under the Fair Labor Standards Act, these regulations implement exemptions from the overtime pay requirements for executive, administrative, professional, and certain other employees. If adopted, the proposed rule would replace the final rule issued in 2016. Although comments on the NPRM are due 60 days after official publication in the Federal Register, the time to prepare for change is now.
DOL Proposes New Rule Raising the Salary Threshold for White-Collar Overtime Exemptions
Last week, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking that would raise the minimum salary threshold required for workers to qualify for the overtime exemptions for executive, administrative and professional workers under the Fair Labor Standards Act (FLSA). The proposal increases the threshold for the white-collar exemptions to $35,308 per year, or $679 per week, up about $12,000 from the current level of $23,660 per year ($455 per week). If approved, the DOL estimates the new rule would take effect in January 2020, and extend overtime protections to more than 1 million workers who are not currently eligible for overtime.
Department of Labor Proposes Increasing Minimum Exempt Pay Levels
The US Department of Labor (DOL) has finally proposed a new rule to update the pay thresholds necessary to satisfy certain “white collar” overtime exemption regulations after its prior rule was rejected by a federal court in 2016. On March 7, 2019, the agency announced the proposed rule, which would increase the minimum salary from $455 weekly ($23,660 annually) to $679 weekly ($35,308 annually) for workers whose duties qualify them for the executive, administrative, or professional exemptions from overtime. The agency also proposes to increase the minimum compensation to qualify for the highly-compensated employee exemption from $100,000 to $147,414 annually. While the proposed new minimum salary is less than the 2016 proposal, the new highly-compensated employee threshold is higher than the prior proposal. The agency estimates the minimum salary increase would make more than one million existing workers eligible for overtime and the increased threshold for highly-compensated employees would make another 200,000 employees eligible for overtime.
Department of Labor’s New Proposed Overtime Rule Released
The U.S. Department of Labor’s (DOL) proposed overtime rule is now available. The 219-page proposal was submitted for final approval in January, according to the Office of Management and Budget.
DOL Proposes $35,308 Minimum Salary For Exempt Employees
Earlier today (March 7, 2019), the U.S. Department of Labor announced new proposed regulations (.pdf) that would increase the minimum salary for employees to qualify for the Executive, Administrative, and Professional exemptions under the Fair Labor Standards Act to $679 per week, equivalent to $35,308 per year. This is an increase from the current minimum of $455 per week ($23,660 per year), set in 2004. However, it is significantly less than the $913 per week ($47,476 per year) minimum established in final regulations issued in 2016 and later blocked by a federal court.
DOL Issues Opinion Letter Clarifying When Employees Paid on Hourly, Daily, or Shift Basis Can Satisfy “Salary Basis” Requirement
On November 8, 2018, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued a new opinion letter addressing the circumstances under which an employee who is paid on an hourly, daily, or shift basis (subject to a weekly guarantee) may qualify as an exempt executive, administrative, or professional employee under section 13(a)(1) of the Fair Labor Standards Act of 1938 (FLSA). While not establishing a bright-line rule, the opinion letter confirms that: (a) a ratio of 1.5-to-1 between an employee’s usual weekly earnings and the weekly guarantee is acceptable; (b) a ratio that exceeds 1.5-to-1 is vulnerable to challenge; and (c) a ratio of 1.8-to-1 or more is probably not acceptable.
Door-to-Door Salesmen, Chauffeur Drivers Not Entitled to Overtime Pay under ‘Fair Reading’ of FLSA, Second Circuit Finds
For the first time, a federal appellate court has acknowledged its obligation to give a “fair reading” to all Fair Labor Standards Act (FLSA) overtime exemptions, as the U.S. Supreme Court stated in Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018). For years, courts have narrowly construed the FLSA exemptions, resulting in many decisions adverse to employers.
Fifth Circuit Weighs in on Motor Carrier Act Overtime Exemption and Small Vehicle Exception
It is commonly understood that employees bear the burden of proving that they are covered by the Fair Labor Standards Act (FLSA), and, to avoid minimum wage or overtime obligations, the employer bears the burden of proving that an exemption to the FLSA applies. One such exemption – common in the transport and energy industries – is the exemption under the federal Motor Carrier Act (MCA). If an employer can demonstrate that workers are covered by the MCA exemption,1 then the FLSA’s overtime requirements will not apply to those workers—with one major caveat.
DOL Fact Sheet: Higher Education Institutions and Overtime Pay Under the FLSA
The U.S. Department of Labor (DOL) issued an informative “fact sheet” offering guidance on the hotly debated question of employee exemptions for minimum wage and overtime pay obligations under the Fair Labor Standards Act (FLSA). Fact Sheet 17S details common “white collar” exemptions at the federal level that apply to certain employees at higher education institutions. It breaks down the exemption analysis by common higher education job categories including:
Toll Road Ahead: Fourth Circuit Rules Mixed-Fleet Interstate Truck Drivers May Be Entitled to Overtime Pay
Despite the overtime exemption provided by the Motor Carrier Act, interstate trucking employers who operate “mixed fleets” – those with vehicles both over and under 10,000 pounds – may owe overtime pay to drivers of the smaller vehicles, the Fourth Circuit Court of Appeals recently ruled. Schilling v. Schmidt Baking Co., 2017 U.S. App. LEXIS 23257 (4th Cir. Nov. 17, 2017). The Fourth Circuit has jurisdiction over Maryland, North Carolina, South Carolina, Virginia and West Virginia.
Labor Department Proposes Reversing Obama-Era ‘Tip-Pooling’ Rule
Employers would be expressly permitted to require servers and other tip-earning employees to share their tips with employees working in the kitchen and other “back of the house” employee, but only when the employer does not use the tip credit and state law would not otherwise prohibit the practice, under proposed regulations published by the Department of Labor (DOL). This is a reversal of the current DOL regulations, which would be rescinded.
Department of Labor Files Appeal and Motion for Abeyance in Overtime Rule Litigation
There have been new developments in litigation over changes to regulations under the Fair Labor Standards Act (FLSA) that specify which workers are eligible for overtime pay.4
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