Town Hall Discussion on the FLSA December 2, 2016 The Government Law Group Andy Phillips Chrissy Hamiel Milwaukee | Madison | Fox Valley - Green Bay | Waukesha County www.vonbriesen.com
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The Change is NOT Here • On May 18, 2016, the U.S . Department of Labor (“ DOL” ) announced the final rules revising the FLS A White Collar Exemption Regulations. – The revisions were to become effective December 1, 2016. • But then… – On November 22, 2016 – j ust 10 days prior to the regulations going into effect – a federal j udge in Texas issued a preliminary inj unction effectively imposing a nationwide prohibition on the regulations taking effect. – Note that the lawsuit was brought by 21 states. Wisconsin is a party to the case. 3
What Did Judge Mazzant Do? • The Court held that Congress intended the executive, administrative, and professional exemption to be based on the duties performed by the employee. • The new salary threshold effectively supplanted the duties test , thus making salary the determinative factor for being able to claim the exemption. • Therefore, the Court said that the DOL had exceeded its authority in this rulemaking. – “ If Congress intended the salary requirement to supplant the duties test, then Congress, not the Department, should make the change.” 4
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Now What? The preliminary inj unction is only temporary . • – Further proceedings will occur to determine whether or not this should be permanent. – This matter will continue and, yes, it may change again. • It is intended to allow the Court time to render a decision on the merits. • The litigation and potential appeals could drag into the New Year, and President-elect Trump could take action to rescind the overtime pay rule, or instruct DOL not to defend. – This rule is one of several that the incoming Trump administration has highlighted to roll back. • Note that Congress has also taken action to delay implementation of the overtime pay rule. 6
An Additional Twist Legislative Attempts to Delay Implementation • – On S eptember 28, 2016 the U.S . House of Representatives passed the Regulatory Relief for S mall Business, S chools and Nonprofits Act (H.R. 6094) by a vote of 246-177. – The bill would delay the start date of the overtime pay regulations for six months – to June 1, 2017. – The S enate has yet to schedule floor time for consideration of their companion bill, S . 3462. 7
Action Items • The U. S . District Court's preliminary inj unction does not affect or halt any actions employers may have taken in anticipation of the Final Rule going into effect on December 1. • Employers will need to decide how to appropriately deal with any changes (reclassification of employees, salary increases, etc.) that were made to ensure compliance with the regulations. – Easier said, than done, right? 8
Moving Forward • Employers for now will not be required to increase salary levels to the $47,476 amount as of yet. • Many employers conducted a good, thorough review of the actual duties being performed by those employees in exempt positions and corrected situations that may not have met the duties tests. – S alary aside, those corrections should remain in place. – Clerical staff is still clerical staff – t hey should not be paid on a salary basis. – There is nothing that limits DOL’ s (or private attorneys’ ) enforcement authority as it relates to existing regulations. 9
Moving Forward • Most employers will most likely simply wait and take a “ wait and see” approach. – What is best for you may not be best for all. • The Trump administration and the Republican Congress have signaled an overturning of this regulation as well as other employment regulations. • The reality is that whether an employer decides to implement changes on December 1 or take a “ wait and see” approach will really depend on what is best for each employer. – S ome employers have set plans in place that fit with their budget, culture and possible promises made. – Others may definitely need the financial relief that the inj unction may provide. 10
What Do I Do While “ Waiting and S eeing” ? • Utilize the FLS A Playbook – Download your copy at www.vonbriesen.com/ school – Note that the Playbook still references the prior salary level of $23,360 • Considerations: – Likely to be difficult to walk back salary increases without affecting morale. • Especially right before the holiday season. • Especially if that raise was substantial to move a truly exempt employee above $47,476. – Reclassification of employees to non-exempt and imposing time tracking requirements have put employers in a flexible position to weather the possible changes. 11
Want more? Of course you do! Visit: www.vonbriesen.com and download your FREE copy of the FLS A Playbook Milwaukee | Madison | Fox Valley - Green Bay | Waukesha County www.vonbriesen.com
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