Update on Overtime Rule
Last May, the Department of Labor (DOL) announced a new rule that would affect who qualifies for overtime. Since then, the rule has been blocked and is currently being appealed by the DOL.
Here is a brief timeline of events thus far:
- The DOL announced a new overtime rule in May 2016 that would raise the salary threshold for overtime qualification — meaning salaried employees earning less than $47,476 annually could qualify for overtime.
- In November 2016, a federal judge filed a preliminary injunction, effectively blocking the rule’s enforcement (originally scheduled for December 2016).
- In August 2017, the overtime rule received summary judgment from a federal court. The court maintained that the DOL did not have the authority to raise the proposed salary threshold so high.
- On Oct. 30, 2017, the DOL began legal steps to move on from the current overtime rule, which will open the door for the DOL to start new rule-making with a lower salary limit.
The proposed overtime rule has kept employers in limbo for over a year, with the possibility of fines for noncompliance hanging over their heads. Unfortunately, this most recent update does not provide closure on the matter, but it does indicate that the next iteration of this rule will be viewed with greater scrutiny by the courts.
For now, employers should wait until after the DOL appeal process before taking action. In the meantime, Higginbotham will keep you apprised of any relevant updates.
Delay for New Disability Benefit Claim Rules
On Dec. 16, 2016, the Department of Labor (DOL) released a final rule to strengthen the claims and appeals requirements for plans that provide disability benefits and are subject to the Employee Retirement Income Security Act (ERISA). The final rule was scheduled to apply to claims that are filed on or after Jan. 1, 2018. However, on Nov. 24, 2017, the DOL delayed the final rule for 90 days — until April 1, 2018.
According to the DOL, concerns were raised that the final rule will impair workers’ access to disability benefits by driving up costs and increasing litigation. During the delay, the DOL will review the final rule to determine whether it is unnecessary, ineffective or imposes costs that exceed its benefits — consistent with President Donald Trump’s executive order on reducing regulatory burdens.
Sponsors of ERISA plans that include disability benefits should continue to monitor the status of the final rule. If the new requirements take effect, entities that administer disability claims will be required to provide new procedural protections to disability claimants.
New Proposed Amendment to Tip-Pooling Regulations
On Dec. 5, 2017, the U.S. Department of Labor (DOL) published a proposal to amend current tip-pooling (tip-sharing) regulations under the Fair Labor Standards Act (FLSA).
If adopted, the proposal would allow employers more flexibility on how they administer tip-pooling programs in their establishments. The DOL is proposing to rescind the parts of its tip regulations that prevent tip-pooling in establishments where tipped employees receive a direct cash wage that is at least equal to the current federal minimum wage rate. The proposed rule would not apply to employers that pay less than the federal minimum wage rate by using any portion of the permissible tip credit. It does affect employers that:
- Pay a direct cash wage that is at least equal to the federal minimum wage rate (currently $7.25 per hour) to their tipped employees; and
- Do not take a tip credit.
In the proposed rule, the DOL projects that eliminating current tip-pooling regulations for affected employers could allow them greater flexibility to determine their pay policies, such as:
- Expanding the pool of participants to include tipped and non-tipped workers; and
- Using tip-pooling as an incentive for both tipped and non-tipped workers to improve the overall quality of services provided at the establishment.
The proposed rule is not expected to create additional reporting or recordkeeping requirements beyond what is already required by other FLSA provisions.
No actions are required from employers at this time. However, the DOL is inviting the public, including employers, to submit feedback regarding the proposal. The DOL has specifically requested that comments on the proposal include supporting data whenever possible.
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