March 2017 HL Quarterly Update

Our last Quarterly Update focused on changes the Trump Administration could make that would affect employers. One such area that has seen recent developments is the Department of Labor and their proposed changes to the Fair Labor Standards Act. These changes have been in the works for quite a long time, but may now be in jeopardy.

Throughout last year, employers were bracing for the impact of new FLSA rules set to take effect December 1, 2016. However, in late November 2016, twenty-one states filed a joint petition asking to stop implementation of the new FLSA rules. This petition was filed in federal court in Texas and the presiding judge granted the temporary injunction the states were seeking. While the court initially moved quickly, there have been several recent adjournments in the matter and very little progress has been made since the injunction was granted. As the matter continues to linger in court, President Trump’s Chief of Staff issued a memo on January 20, 2017 halting the implementation of all federal regulations that have not yet gone into effect. Therefore, the new FLSA rules appear to be in both legal and political limbo.

The most contentious new rule proposed by the DOL would have raised the salary threshold for overtime-exempt workers from $23,660 to $47,476. This means that if the new rules are adopted, anyone making less than $47,476 annually would be subject to overtime pay regulations. While this change may seem simple, its effects may be very complicated. The previous overtime rule did not focus entirely on salary, as it also took into account the types of duties performed by employees. However, it is believed that the dramatic new increase in the salary threshold could create a de facto salary only determination of an employee’s status. As a result, the new rules could provide employers the ability to attempt misclassifying workers to avoid paying them overtime.

Submitted by Jonathan Rea, jrea@hanbalazar.com.

Please leave us comments/questions. If there is a topic that you would like to see discussed in this Quarterly, please let us know. Comments and questions can be directed to Stephen Cooley at scooley@hanbalazar.com.