Today, July 26, 2017, the Department of Labor issued a Request for Information seeking notice and comment from the public before issuing revised proposed regulations regarding the minimum salary level required to meet the executive, administrative, and salary level exemption from the overtime requirement. As discussed in previous blogs, the DOL issued regulations last year that increased the salary level requirement, which had been last updated in 2004, from $455 per week to $913 per week. The regulations were scheduled to become effective December 1, 2016. However, a district court in Texas issued an injunction that prohibited the regulations from becoming effective. See Nevada, et. al. v. U.S. Department of Labor, et. al., 218 F. Supp. 3d 520, 534 (E.D. Texas 2016). The appeal of that injunction is currently pending. The DOL has stated that it does not intend to pursue the salary level of $913 per week which was a part of last year’s rule. In fact, the Request for Information states that “[t]he Department is aware of stakeholder concerns that the standard salary level in the 2016 Final Rule was too high.”
The Request for Information seeks comment on eleven issues, which are summarized as follows:
- Whether updating the 2004 salary level for inflation would be an appropriate basis for setting the level (and, if so, what measure of inflation to use), or whether applying the 2004 methodology to current salary data would be appropriate? It also asks whether using either salary level require changes to the duties test, and, if so, what those changes should be?
- Whether the regulations should contain multiple salary levels, and, if so, how the levels should be set (size of employer, geographical region, etc.).
- Whether there should be different salary levels for executive, administrative, and professional exceptions, and what the impact would be on employers and employees.
- Whether the standard salary level should be set within the historical range of the short test salary level, long test salary level, or should it be based on some other methodology?
- Whether the standard salary level in the 2016 Final Rule works effectively in the standard duties test or whether it eclipses the role of the duties test, and at what salary level does the duties test no longer fulfill its role in determining exempt status.
- What were employers’ reactions to the 2016 final rule in terms of whether they increased salaries to retain exempt status, decreased employees’ hours so that they didn’t work overtime, converted workers from salary to hourly, or made changes to workplace policies limiting employee flexibility to work after normal working hours or to track work during those times? What was the impact of these changes?
- Would a test that focuses solely on the employee’s duties be preferable to the current salary test? If so, what would the duties test be, and would it include examination of the amount of non-exempt work performed?
- Does the salary level test in the 2016 final rule exclude from exemption particular occupations that were traditionally exempt, and, if so, what are those occupations? Do employees in those occupations perform more than 20% or 40% non-exempt work per week?
- Should the regulations allow non-discretionary bonuses and incentive payments to satisfy the standard salary level and, if so, what would be an appropriate limit?
- Should there be multiple total annual compensation levels for the highly compensated employee exemption? If so, how should they be set (size of employer, census region, state, metropolitan statistical area, etc.)?
- Should the standard salary level and total annual compensation level (for highly compensated employees) be automatically updated on a periodic basis and, if so, what mechanism should be used for the automatic update, and whether automatic updates should be delayed during periods of negative economic growth.
The Request for Information can be found here.