Uncertainty regarding the DOL’s salary and overtime regulations

Content by Brian C. Zaldivar of Danna McKitrick, P.C.

A federal district court in Texas has delayed the enforcement of the Department of Labor’s changes in overtime regulations.

In May 2016, the Department of Labor published a final rule that has caused a fury of scrambling amongst employers, in both the public and private sectors, to review their employee’s salary levels and exempt statuses. This final rule relates back to the Fair Labor Standards Act (“FLSA” or the “Act”), enacted in 1938, which set minimum wages and provided for overtime pay for hours worked above 40 in a week. Section 213(a)(1) of the Act, however, exempted overtime provisions for any employee employed in a bona fide executive, administrative, or professional capacity. This is known today as the “EAP” or “white collar” exemption. The Act also gave the Department of Labor regulatory authority to “define and delimit” those exemptions.

The current regulations concerning the white collar exempt status, promulgated in 2004, required an employee to meet three criteria. First, an employee must be paid on a salary basis (the “salary-basis test”). Second, an employee must be paid at least the minimum salary level established by the regulations (the “salary-level test”). And third, an employee must perform executive, administrative, or professional duties (the “duties test”). See “It’s Almost Time: DOL Overtime Exemption Rules Effective Dec. 1, 2016” for more information on the current regulations.

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