Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The U.S. Department of Labor will send its draft of the long-awaited Notice of Proposed Rulemaking (NPRM) on the “white collar” overtime exemptions to the White House Office of Management and Budget (OMB) for review on or before Friday, January 11, 2019, as reported by Bloomberg Law and independently confirmed by Littler. OMB review is the final step before publication of the proposed rule in the Federal Register.
If adopted as drafted, the proposed rule would replace the final rule issued in 2016. The 2016 final rule would have increased the minimum salary level for exemption as an executive, administrative or professional employee from $455 per week ($23,660 annualized) to $913 per week ($47,476 annualized), except that suit against the DOL brought by the U.S. Chamber of Commerce and other trade associations succeeded in obtaining a permanent injunction blocking the rule.1 The Trump administration, however, appealed that decision to the U.S. Court of Appeals for the Fifth Circuit, and then obtained a stay of the appeal pending further regulatory action. The DOL originally scheduled publication of an NPRM for October 2018, but that date was first delayed until January 2019 and then until March 2019.
Employers have been increasingly concerned with the DOL’s failure to act, as the Fifth Circuit could reverse the injunction against the 2016 rule if the DOL does not finalize a new rule before the 2020 presidential election and President Trump does not win a second term. Should this occur, a $48,000 salary would be required for exemption without any further action by the DOL.
The OMB's review of the draft proposed rule could take several months and could be further slowed by the partial government shutdown. The public will not get a glimpse of the proposal until after OMB approves it for publication in the Federal Register, which is now more likely to happen in March. We expect the DOL to set a salary level in the low- to mid-$30,000s, using the methodology established in the 2004 rulemaking (that increased the minimum salary from $150 per week to $455).
Littler will continue to provide periodic updates as we learn more information.
1 Littler shareholder Maury Baskin represented the trade associations in this litigation.