World At Work Update on Overtime Law Threshold

By Robert Baylor, WorldatWork

May 2, 2016 — Washington, D.C. — The U.S. Department of Labor (DOL) appears to be lowering its proposed salary-level threshold in its upcoming revision of the nation’s overtime pay regulations.

While the official rule has yet to be formally released, news sources in Washington, D.C., are indicating that the final rule’s threshold will be about $3,000 lower when it is officially published, perhaps as early as this month.

The Bloomberg BNA Daily Labor Report, a reliable Washington-insider business policy publication, reported late last week that “a Democratic staffer confirmed that the new threshold — below which workers are eligible for overtime pay — will be about $47,000 per year.” The influential Washington political publication Politico also confirmed the figure in its own April 29 news report.

Last summer, the DOL proposed in its Notice of Proposed Rulemaking to raise the new Fair Labor Standards Act of 1938 (FLSA) minimum salary threshold to $50,440.

It is not known why this information was leaked at this time, as this kind of disclosure is unusual and risky in the regulatory departments. Some in Washington policy circles are speculating that the leak is a “trial balloon,” floated early by the department to see what kind of reaction it may generate.

The final rule is currently being reviewed by the White House’s Office of Information and Regulatory Affairs (OIRA), the final stop before a new regulation is released. WorldatWork learned last week the office is refusing to take new meeting requests to discuss the rule after May 10, possibly indicating the rule’s review is in its end stages. The rule could be released as early as May 12 or May 13, which could line up a possible implementation period ending around Labor Day 2016, two months before Election Day.

WorldatWork and other compensation experts met with OIRA officials on April 18 to express their concerns that the proposed DOL rules does not take into consideration the true cost of raising the overtime threshold 113% from its current level of $23,660 per year.

“WorldatWork is very concerned about DOL’s proposal, even at the reported $47,000 level. That level is still more than 100% higher than what organizations have organized their pay structures around for this fiscal year,” said Claiborne Guy, WorldatWork’s U.S. Senate lobbyist. “The association is also very worried that OIRA and DOL do not understand the potential disruption the proposed yearly update to the salary level threshold will cause to businesses and potentially millions of employees across the country.”

The Economic Policy Institute, a liberal Washington, D.C., think tank, estimates the number of American employees likely to be affected at a $47,000 level is about 12.5 million, or 33% of the nation’s salaried workforce. In 2015, the White House estimated that, as proposed, the regulation would increase the number of workers eligible for overtime by nearly 5 million. Of those, 1.2 million would receive a wage hike, according to DOL estimates.