Labor Department Goes Live With Request for Overtime Rule Input

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By Ben Penn

The general public may now begin submitting comments to the Labor Department on how and whether it should revise the Obama-era overtime rule.

The DOL’s Wage and Hour Division July 25 issued its anticipated request for information on the rule, which doubled the salary threshold below which workers can earn time-and-a-half overtime. In the request, the WHD lists 11 questions for interested parties to consider, including whether the previous threshold of $23,660 should be updated for inflation, and how; whether a new salary level should vary by employer size or region; and whether changes to the duties test for overtime exemption are needed.

After the RFI’s publication in the Federal Register scheduled for July 26, commenters will have 60 days to submit their suggestions on the rule. The original version finalized in 2016 was considered a centerpiece of Barack Obama’s middle-class agenda and was hailed by worker advocates for adjusting time-and-a-half pay protections to the modern economy. The employer community and GOP lawmakers criticized the new salary level for being too high, too fast, and said it would force businesses to trim jobs and limit schedule flexibility.

The Trump administration has said it plans to revisit the rule, which has never taken effect because of litigation. The RFI is considered a first step to gather advice on an eventual proposal that would set a new salary threshold higher than the current $24,000 level but lower than the $47,000 figure set under Barack Obama.

“I think that real earnings—compensation plus accounting for low-wage industries and regions—needs to be looked at in coming up with an appropriate number, but I think it would be in the mid-to-low $30,000s range,” Alfred Robinson, an acting WHD administrator in the George W. Bush administration, told Bloomberg BNA. Robinson now represents employers as a shareholder at Ogletree Deakins in Washington.

The department has yet to discuss a specific new figure that it may be considering for an eventual proposal. However, Labor Secretary Alexander Acosta said during his March confirmation hearing that if the salary level were updated via straight inflation, it would fall “somewhere around $33,000.”

The DOL told a federal appeals court in June that it will not issue a new proposed rule until after the court affirms the agency has the authority to use an employee’s salary as a basis for determining overtime eligibility. Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas last year put the rule on hold, saying the department focused too much on workers’ salaries, rather than their job duties, in updating the existing regulation.

Next Steps

Stakeholders from the labor and management sides will now embark on drafting their comments tailored to the specific set of questions in the RFI.

Rather than limiting the question topics to just the salary threshold, the agency is fielding questions on a wide field of topics, essentially reopening debates that took place during the prior administration’s public notice and comment on overtime.

Some of the employer commenters who weighed in on DOL’s 2015 proposed rule suggested setting several salary levels depending on a region’s cost of living or on the number of employees at the business. By seeking input on this very topic in the new RFI, the department isn’t necessarily indicating that it’s leaning towards going in that direction for the new rule, said Alex Passantino, an acting WHD head under Bush.

“If you think about the regulatory process, there isn’t much opportunity for commenters to address the comments of other commenters,” Passantino, a partner at management firm Seyfarth Shaw in Washington, told Bloomberg BNA via email. “With the RFI, some of those interesting suggestions are being afforded a full vetting.”

A variable salary level wouldn’t be universally welcomed by employers, as it would create more uncertainty for businesses, Robinson said.

Plus, according to one of the Obama rule’s original drafters, the variability in regional compensation was already factored into the $47,000 level.

“If you’re working in Alabama for Mercedes Benz as a supervisory employee in their manufacturing plant, why should you be at a lower salary level than an equivalent person in Michigan working for GM or Ford,” Michael Hancock, who was an assistant WHD administrator for policy during the drafting phase under Obama, told Bloomberg BNA. Hancock is now of counsel with plaintiffs’ firm Cohen Milstein in New York.

The DOL asked for commentary on the standard duties test, which requires workers to perform managerial tasks in order to remain ineligible for time-and-a-half pay, including those who are paid more than the minimum threshold. The DOL even asked for opinions on a duties-only test, which many employers and employees would oppose because it removes a bright-line test and would create more ambiguity.

Randy Johnson, senior vice president of labor, immigration, and employee benefits for the U.S. Chamber of Commerce, said he was pleased the administration is taking steps to replace the previous rule but that the duties test questions raise a red flag.

“We are concerned that the proposal unnecessarily opens the door to changes to the so-called ‘duties test’ given that the rule under reconsideration and blocked by the courts did not make changes in this area. We look forward to submitting comprehensive comments in response to the Department’s questions,” Johnson said in a prepared statement.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

For More Information

The request for information is available at http://src.bna.com/q3Y.

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