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FLSA Exemption Changes Update

A recent alert addressed highly anticipated changes to the “salary test” under the Fair Labor Standards Act (FLSA), one of three factors used in determining an employee’s exempt status. It appears the final rule is moving closer to publication as the Department of Labor (DOL) has submitted its final changes to the Office of Management and Budget (OMB). After a review period, the final rule will be published in the Federal Register and will likely take effect 60 days later. Although the OMB review period could range from weeks to months, many sources are predicting the final rule will be published between May 16 and the first week of July.

The DOL received more than 250,000 comments after the proposed rule was announced in July of last year. Many of those comments, understandably, focused on the 113% increase between the original salary threshold ($23,660) and the proposed salary threshold ($50,440). Reports now indicate the final rule could increase the salary threshold from anywhere between $47,000 and $50,4400; however, differences between the proposed rule and final rule will not be known until after the final rule is issued.

To make matters interesting, legislation has been introduced trying to push back on the new overtime rules. The Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773) would, among other things, require the Secretary of Labor to nullify the proposed rule and conduct an economic analysis to determine its impact on certain employers before implementation. Although the bill is not expected to become law given President Obama’s ability to veto the bill and the unlikely chance that a 2/3 majority of each chamber of Congress would vote to over-ride his veto, sponsors hope the bill’s introduction might delay publication of the DOL’s final rule far enough into the future that the Congressional Review Act might come into play.

The Congressional Review Act (CRA) allows final rules promulgated by federal agencies to be overturned through a joint resolution of disapproval passed by the House and Senate, subject to Presidential veto. The CRA provides that if a final rule is submitted to Congress or published in the Federal Registrar with less than 60 session days left in the Senate or less than 60 session days left in the House, then a new period for congressional review of that rule becomes available in the next session of Congress. Accordingly, if the new FLSA amendments are published prior to the “60 session days” cut off, they will likely not be subject to disapproval under the CRA. However, if publication occurs after this cut off, and the incoming President and Congress oppose the regulation, then the regulation could be subject to disapproval.

We look forward to discussing these issues at our June 1 seminar and will continue to keep you updated on the status of publication of the final rule.

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