June 24, 2016

The Labor Department expects its overtime rule to reduce private claims, but attorneys on both sides of the wage-and-hour bar say the effect on litigation is tough to forecast.

Will the rule reverse the past decade's surge in overtime cases brought under the Fair Labor Standards Act? Seth Harris, a former Obama administration deputy labor secretary, told Bloomberg BNA: “I think that there are vectors pointing in different directions.”

Harris and other observers agree with top DOL officials that the rule will lessen employees' need to sue for unpaid time-and-a-half wages. By doubling the salary threshold below which workers are automatically eligible for overtime pay, the regulation is seen as creating certainty for employers in many cases about who is owed overtime. The new cutoff is $47,476, effective Dec. 1.

Several plaintiffs attorneys said employers may try to scrimp on overtime in a number of different ways. That includes capping hours and pressuring supervisors into refusing to sign off on hours after the fact.

Michael Hancock, previously a senior attorney in the DOL’s Wage and Hour Division and now of counsel at Cohen Milstein Sellers & Toll in Washington, said those types of cases may become more common if employers start responding to the regulation by switching salaried workers to hourly positions.

“When exempt salaried are converted to hourly, it’s often the case that those types of mistakes are being made,” Hancock said.

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