Jun 09, 2014

Regulatory Agenda Sets Deadline for Proposed Revisions to FLSA Exemptions

In a previous client alert, we informed our clients of President Barack Obama’s March 13, 2014 directive to the Secretary of Labor to modernize and streamline the Fair Labor Standards Act’s (“FLSA”) existing overtime regulations for executive, administrative, and professional employees (“the ‘white collar’ exemption”).  The regulations have not been updated since 2004.

Recently, the Obama Administration released its required Semiannual Regulatory Agenda (“Agenda”) that included several items relating to the FLSA.  Regarding the ‘white collar’ exemption, the Agenda provides that the Department of Labor (“DOL”) will submit a proposed rule containing the necessary revisions by November of this year.  The proposed rule will increase the salary level and revise the specific job duties required to qualify for the exemption.  Furthermore, the DOL proposes to update the recordkeeping regulations under the FLSA to enhance the transparency and disclosure to workers of whether they are classified as employees, independent contractors or some other status, and how their pay is to be computed.  This “Right to Know Under the Fair Labor Standards Act” has been deemed a long-term goal of the administration, and no deadline for a proposed rule has been set.

The arduous nature of the rulemaking process means that any changes are still well in the future.  Once the DOL issues its notice of proposed rulemaking, there will be a public comment period that lasts approximately 30 days.  Then, the DOL will hear testimony regarding the proposed changes before issuing a final version of the revised regulations to the Office of Information and Regulatory Affairs (“OIRA”).  OIRA will then conduct a review of the proposed regulations and publish the final text of the regulation in the Federal Register.  OIRA’s period of review is limited by Executive Order to 90 days with the possibility of a single 30-day extension.

What does all this mean?  Despite the current administration’s attempts to push through the changes before the end of President Obama’s term, we are unlikely to see any actual revisions to the regulations before early to mid-2015.  Moreover, the drastic nature of these changes may provoke legal challenges that would further delay their implementation.  If you have any questions regarding the Agenda or the potential revisions to the FLSA, please do not hesitate to contact your Labor & Employment Counsel at Smith, Gambrell & Russell, LLP.

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