July 28, 2023
The U.S. Department of Labor has crafted an update to the Fair Labor Standards Act’s overtime exemption, but before the public gets a look, Law360 asked wage and hour practitioners what they would like to see — from a higher salary threshold to reforms related to remote work.
After repeated delays, the proposed rule to revise the federal overtime regulations, titled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional Outside Sales and Computer Employees,” arrived at the White House’s Office of Management and Budget on July 12.
The overtime exemption is at the core of the FLSA’s history — delineating the distinct wage rights of salaried versus hourly employees. Generally, white collar workers are exempt from overtime if they perform specific duties related to their particular exemption and are paid a minimum of $684 per week on a salary basis, defined as a guaranteed weekly amount that does not vary based on the quality or quantity of work.
Here, attorneys lay out their wishlist for the long-awaited rule.
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With such a weakened, subjective duties test, there is an argument for the salary level to do the “heavy lifting” of the exemption analysis by setting the salary level high enough to reflect where workers should fall, said D. Michael Hancock, of counsel at worker-side firm Cohen Milstein Sellers & Toll PLLC and former assistant administrator for DOL’s Wage and Hour Division.
“It’s not hard under the Bush definition of duties to define … the Dollar General Store assistant manager, who spends 90% of her time running a cash register and stocking shelves … as exempt under the executive duties test and to pay her a very, very low salary,” he said. “She may be working at below minimum wage without having access to the overtime premium.”
A strict salary test would also be more efficient, Hancock said.
“They’re still going to be arguments about the duties. But the overwhelming majority of those disputes are going to be settled by whether or not they meet the salary test,” he said. “One of the virtues of a stringent salary basis test is to eliminate the uncertainty on both the employee and the employer side.”