Stay Tuned: Notable Developments with the U.S. Department of Labor
By: Lisa M. Schonbeck, Esq.
Updates to the White Collar Exemption Forthcoming
On March 13, 2014, President Barack Obama instructed the U.S. Department of Labor (“DOL”) to overhaul the regulations that define which white collar workers are eligible to receive overtime pay. The DOL’s proposed rule could be issued any day now.
Under the current regulations, workers who perform the duties of exempt professional, administrative, and executive employees and who are paid on a salary basis of at least $455 per week are exempt from the requirement that employees be paid at least 1.5 times their regular rate for hours worked over 40 in a workweek. The DOL’s anticipated proposed rule will likely include a considerable increase in this minimum salary amount, as well as significantly narrow the duties requirements. In particular, it is expected that the new duties test for the executive exemption will include a requirement that a certain percentage of the employee’s time be spent performing “executive” duties. As a result, many workers previously classified as exempt from overtime may be entitled to overtime compensation under the new regulations.
Industries most likely to be impacted by these anticipated regulations include the retail and restaurant industries, which often take advantage of the executive exemption to classify their managers and assistant managers as exempt executive employees. Under the current regulations, managers are still exempt as executive employees even if they if they are simultaneously performing non-managerial tasks (e.g., bussing tables, serving customers, and preparing food). As long as their primary duty is the performance of duties that meet the exemption, the exemption is not lost. The DOL’s anticipated proposed rule will likely change this outcome, resulting in many managerial employees being entitled to overtime if they do not spend the requisite percentage of their time on exempt duties.
Federal rulemaking procedures dictate that the DOL will publish a “Notice of Proposed Rulemaking” once proposed regulations are prepared. The public will have 30 to 90 days to file comments on the proposed rule.
Department of Labor Takes Aim at Oil and Gas Industry
Throughout 2014, the U.S. Department of Labor (“DOL”) engaged in a wage and hour enforcement initiative focused on the oil and gas industry in New Mexico and west Texas. The DOL recently released the results of this initiative, which illustrate the struggle employers within the oil and gas industry continue to experience when it comes to complying with their wage and hour obligations.
As a result of the DOL’s initiative, employers in New Mexico and west Texas paid over $1.3 million in back wages to 1,300 employees. Recently, employers in Pennsylvania and West Virginia working within the Marcellus Shale region agreed to pay $4,498,547 for similar wage and hour violations. The DOL has determined that the majority of the violations committed by employers in the oil and gas industry result from the failure to pay proper overtime, which is often due to employers misclassifying employees as exempt under the Fair Labor Standards Act (“FLSA”). Another common mistake among employers in the oil and gas industry is to classify its workers as independent contractors when their relationship is really that of employer-employee, which also subjects employers to liability for back overtime wages and employment taxes.
Leech Tishman’s employment attorneys will continue to monitor the status of the anticipated regulations concerning white-collar exemptions from overtime, and are available to answer any questions employers have about the impact of these developments on their business. Additionally, we will continue to track the DOL’s enforcement initiatives, and can assist your organization in complying with its wage and hour obligations.
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