Since last spring, we have been following developments in the oft-delayed Fair Labor Standards Act (FLSA) regulations rewrite by the Department of Labor (DOL). Yesterday, we received word that the DOL has completed a draft of the new regulations and sent them to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) for review. On Tuesday, Perez wrote in a DOL blog post, “We’ve worked diligently over the last year to develop a proposed rule that answers the President’s directive and captures input from a diverse range of stakeholders. After extensive research, study and careful analysis, we have submitted the proposed rule to the Office of Management and Budget for review. In the near future, the public will have an opportunity to weigh in and help us craft a final rule.” The submission of the new draft regulations to OIRA is the final step before the DOL officially releases the new regulations as a Notice of Proposed Rule Making for public comment.
The draft regulations revising the overtime regulations are subject to the federal Administrative Procedure Act’s rulemaking process, which means the administration still must complete a number of time-consuming steps before finalizing any rule change. After OIRA conducts its initial review, which should be relatively quickly—possibly as early as late this month or early June, the DOL will then take testimony, consider public comments, and have a final version of the revised regulations approved by OIRA. Typically, the public comment period extends at least 30 days. After, the DOL drafts a final regulation that responds to any public comments, OIRA would then conduct a final review, approve the text of the regulation, and publish it in the Federal Register. The period for the Office to review a draft regulation is limited by an Executive Order to 90 days, with the possibility of a single, 30-day extension. While there is no minimum period for review, the average review time in past years has been approximately two months. Therefore, even with a short 30-day comment period and a quick turnaround on a final rule, the DOL’s new regulation will not likely be published until this fall.
Affected parties are likely to file legal challenges to the new regulations, just as they did in 2004, which could (but probably will not) delay the rules’ implementation further. Congress may also put up some resistance. When President Obama first directed the DOL to begin drafting new FLSA regulations last year, Sen. Lamar Alexander (R-TN), who now chairs the Senate Committee on Health, Education, Labor and Pensions, said, “The President’s directive—combined with his support for a minimum wage hike, his executive order increasing minimum wage for federal employees and federal contractors, and the heap of mandates from his health care law—seems engineered to make it as unappealing as possible to be an employer creating jobs in this country.” However, disapproval from members of Congress is unlikely to have any legal impact on the release of the new FLSA regulations, with President Obama holding the veto pen and enough Democrats in both the House and Senate to thwart any attempt to override his veto.
The DOL has updated the FLSA regulations only twice in the last 40 years, most recently in 2004, when the Bush administration overhauled the “white collar” overtime exemptions and set the salary threshold at $455 per week ($23,660 per year). As we have discussed previously, rumors suggest that the administration has settled on an annual salary threshold of over $40,000, and, as Secretary Perez’s blog posts suggests, we anticipate that the new white collar regulations will be more worker-friendly.
“The rules governing who is eligible for overtime have eroded over the years,” Labor Secretary Tom Perez wrote yesterday. “As a result, millions of salaried workers have been left without the guarantee of time and a half pay for the extra hours they spend on the job and away from their families.”
In 2014, President Obama directed DOL to “propose revisions to modernize and streamline the existing overtime regulations.” In particular, the president stated that current regulations exempting certain employees from the Fair Labor Standards Act’s (FLSA’s) overtime requirements “have not kept up with our modern economy.” According to the White House, millions of salaried workers have had to work 50 or 60 hours a week without being paid overtime—and, in some cases, “making barely enough to keep a family out of poverty.”
We’ll keep a close eye on the OIRA review of the new DOL FLSA regulations and report back to you as soon as the DOL releases proposed rules or we learn any new information.
Doug Hass is an associate at Franczek Radelet and the primary author of Wage & Hour Insights Blog.
