Budgets and Employees Impacted by DOL (Proposed) Rules
The DOL published three Notices of Proposed Rulemaking; regular rate, joint employment, and overtime exemptions under the Fair Labor Standards Act (“FLSA”). The proposals are not final.
Regular Rate
The DOL proposed rule amends the FLSA regulations concerning compensation and benefits that employers must include in the overtime calculation. Under the proposal, examples of the types of pay that must be included in the employee’s regular rate, in addition to base hourly wages, include non-discretionary bonuses, commissions and shift differentials. The DOL has proposed new examples of discretionary bonuses that are excludable; bonuses paid to employees who make unique or extraordinary efforts that are not awarded according to pre-established criteria; severance bonuses; bonuses for overcoming challenging or stressful situations; and employee-of-the month bonuses. These definitions are not defined. The current proposal excludes most employer provided benefits from this calculation.
Public comments due May 28, 2019.
Joint Employment
The proposed rule would revise the regulations that define when two companies are considered joint employers of the same employee. The DOL proposes a four-factor test for determining joint employment under the FLSA. The DOL would consider whether the potential joint employer actually exercised the power to hire, fire, supervise, control work schedules, control conditions of employment, determine pay and how employees are paid, and maintain personnel records.
Public comments deadline June 10, 2019.
Overtime Exemptions
The DOL also proposed an increase to the minimum salary for exemption from $455 per week ($23,660 annualized) to $679 per week ($35,308 annualized), and to increase from $100,000 to $147,414 the total amount of annual compensation individuals must receive to qualify for the highly compensated employees exemption. This is the salary test.
Under FLSA two tests, salary and duties, must be met to qualify for the overtime exemption. Also important to note is that under the FLSA, overtime is calculated after forty (40) hours in a work week. Many states have laws governing overtime calculations which may be more generous and need to be applied.
Public comments due May 21, 2019.
The potential impact to employers includes budgetary concerns, potential pay adjustments, policy amendments, job description reviews and further analysis under the FLSA exemption tests to ensure jobs are classified properly.
We will continue to monitor these proposals and advise you accordingly. Employer comments to the DOL are encouraged.