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Breaking: USDOL Releases Overtime Rule 2.0 For 2020

The suspense is over – the Department of Labor just this morning announced the revised Overtime Rule, which will set the minimum salary threshold for the Fair Labor Standard Act’s white-collar exemptions at $684 per week, or $35,568 per year. The rule, which will expand overtime pay obligations to an estimated 1.3 million additional workers, will take effect on January 1, 2020. What do you need to know about this breaking news?

Executive Summary: Proposed Rule In A Nutshell

  • The minimum salary threshold will be $684 per week, annualized to $35,568 per year.
    • The rule provides for one threshold regardless of exemption, industry, or locality, subject to a few exceptions that already existed.
    • Employers will be able to credit certain non-discretionary payments in limited ways.
  • The highly compensated employee exemption’s additional total annual compensation requirement will be set at $107,432 per year.
  • No changes will be made to the duties tests – the crux of the relevant exemptions.
    • The changes are limited to the executive, administrative, professional, and highly compensated employee exemptions.
    • No change has been made to the various other exemptions (for example, outside sales) that do not specifically include a salary requirement even if the employee happens to earn a salary.
  • There will be no “automatic” updates, or even a formal schedule of future adjustments to these figures.
    • However, you can expect that the salary threshold will be assessed more frequently than it has been in the past, but hopefully not so often that it essentially drives the market.

A Brief History Of The Overtime Rule Saga

It seems an eternity ago when President Obama directed the U.S. Department of Labor (USDOL) to revise the regulations governing the outdated white-collar exemptions of the Fair Labor Standards Act (FLSA). The proposal eventually released by the USDOL would have radically altered the federal compensation rules. Most notably, the agency would have more than doubled the salary threshold and applied, essentially, a formula to update the amount every three years. This minimum threshold was set to become effective on December 1, 2016, and the “updating” would begin, ironically, on January 1, 2020.

But concerned states and business groups sought to block the rule from taking effect, and, at the last minute, a federal court issued a preliminary injunction preventing the rule from being implemented on a nationwide basis. Since the Texas court put the final nail in Overtime Rule 1.0’s coffin by striking down the rule once and for all in August 2017, employers have been patiently awaiting a revised rule.

Under the current administration, USDOL leadership indicated that it would no longer advocate for the $913 per week proposal but would instead undertake further rulemaking to determine what the salary level should be. In what seemed like a painstakingly long process, the agency held public forums, issued a request for information, and sought comments on a proposed rule that, like Overtime Rule 1.0, focused solely on the pay component but without completely overshadowing the duties tests. After all, the FLSA authorizes the agency to define and delimit the executive, administrative, and professional exemptions – not supplant them. Today, finally, all of the work culminated in the release of Overtime Rule 2.0.

Will This Rule Survive?

After the drama surrounding the last-minute injunction blocking the 2016 proposal, it would be natural for employers to feel gun-shy about adjusting to these changes. After all, isn’t there a chance that another court will once again block these changes and put us in yet another state of limbo? While there is always a chance for litigation to unfold in such a way that it would impact the implementation of this rule, there are several reasons why you should be preparing as if this rule will go into effect as planned on January 1, 2020.

First, while there is no magic number for setting the salary threshold (that's the whole point), there is something to be said for certainty. The new rule skirts some of the more problematic areas that existed with the first attempt at revisions. The $684 per week threshold will require the reclassification (or pay increases) of some employees, but a far less significant portion than would have seen increases had the $913-per-week proposal of three years ago was adopted. 

Second, while the rule contains some of the same flaws as Overtime Rule 1.0, they generally are not the kinds of concerns that were previously raised in lawsuits. Employer advocates will have more difficulty taking the position that this particular threshold eclipses the duties tests. Likewise, while employee advocates might feel that the threshold is set at too low a level, meeting the pay component does not make someone exempt in and of itself, so this argument is more philosophic in nature and may not warrant the rule being blocked.

Finally, the USDOL must be well prepared at this point to defend the rule. Even aside from the litigation, it has received voluminous public feedback on an increase from $455 per week numerous times, including those shared in 20152017, and 2018. So, while litigation seems inevitable, employers should not be idle in preparing for this rule to take effect.

Avoiding The Last-Minute Panic

As recounted above, the drama surrounding Overtime Rule 1.0 was a painfully long process for employers as they waited to see what might happen. The best practice, though, is to assume Overtime Rule 2.0 is the real thing. That said, you should not run out tomorrow and make immediate changes to your compensation structure. Instead, you should use this time to start evaluating not just whether changes will be necessary, but how best to make those changes (timing, communications, etc.).

If you made changes in 2016 in anticipation of the $913 per week threshold, you are certainly ahead of the curve. If you did some of the work but decided to wait to implement once the preliminary injunction was put in place, you also have a great head start. Nonetheless, in both cases, you must keep in mind that three years have passed and it is possible that an employee’s work has changed in the interim. 

It is imperative to confirm your prior findings at least for any employee that might receive a salary increase to qualify for exempt status under Overtime Rule 2.0. No employee is automatically entitled to be treated as exempt; in contrast, increasing the salary for an employee that does not meet the duties tests can only make matters worse.

Right now, you should be:

  • Analyzing whether those exemptions you have been relying upon will still apply;
  • Considering the possible application of alternative FLSA exemptions; and
  • Developing FLSA-compliant pay plans for employees who have been treated as exempt but who no longer will be.

The USDOL released extensive commentary explaining its rationales for the revised provisions. We are continuing to study the final regulations and accompanying discussion carefully and will offer further considered views, so you should ensure you are subscribed to Fisher Phillips’ alert system to gather the most up-to-date information, and follow our Wage And Hour Blog to see our latest commentary.

Contact your Fisher Phillips attorney, or any member of our Wage and Hour Practice Group, for materials and other guidance as you consider what steps to take.

 

2020 Convention Mobile App is Available Now!

We are excited to announce the mobile app for the 2020 National Watermelon Association convention at Disney's Yacht & Beach Club Resorts. The all new mobile app has everything you need for our upcoming convention. 
On the app you can:
- Register for convention and outside events
- Reserve your hotel room
- Check out the Agenda
- View our sponsors, speakers and exhibitors
- Check out the maps in the agenda that has important locations pin pointed
- View our Honorees and Convention Dedication
- View our Watermelon Queens

Make sure to download the app today!
 

Effective October 15, 2019, the final rule on public charge of inadmissibility will go into effect. 

Since 1996, federal laws have stated that foreign nationals generally must be self-sufficient. This final rule, according to the U.S. Citizenship and Immigration Services office, provides guidance provides guidance on how to determine if someone applying for admission or adjustment of status is likely at any time to become a public charge.  The rule will open up the government’s determination of self-sufficiency (or the lack thereof), and can reach well into the agriculture sector given the reliance on a workforce which is predominantly foreign-born and has relatively lower educational attainment than may be the case elsewhere in the economy.  How this will shake out is yet to be seen.  CLICK HERE to read through an interesting report on the rule and its potential implications.

https://www.uscis.gov/legal-resources/final-rule-public-charge-ground-inadmissibility

 

The Department of Labor (DOL) proposed a rule to “modernize and improve” the H-2A Temporary Agricultural Labor Certification Program

The Department of Labor (DOL) proposed a rule to “modernize and improve” the H-2A Temporary Agricultural Labor Certification Program.  A comparison grid of current rules to the proposed changes is attached for your review.  The reforms, which do not require Congressional action, would do the following:

  • Streamline the H-2A application process by mandating electronic filing of job orders and applications with the use of digital signatures
  • Provide employers with and the option of staggering the entry of H-2A workers on a single application
  • Strengthen protections for U.S. and foreign workers by enhancing standards  applicable to rental housing and public accommodations
  • Strengthen surety bond requirements
  • Expand the department’s authority to use enforcement tools like program debarment for substantial violations of program rules
  • Update the methods us
  • ed to determine the Adverse Effect Wage Rates and prevailing wages to ensure U.S. workers similarly employed are not adversely impacted
  • Expand access to the H-2A program by revising the definition of agricultural labor or services to include employers engaged in reforestation and pine straw activities

According to a DOL news release, 

“Furthering the agenda to help America’s farmers, the Department of Labor (the Department), Employment and Training Administration and Wage and Hour Division, is posting online a Notice of Proposed Rule-making (NPRM) to solicit public comment on proposed changes to improve the H-2A temporary agricultural labor certification program. These proposed changes would modernize the department’s H-2A regulations in a way that is responsive to stakeholder concerns and enhances employer access to a legal source of agricultural labor, while maintaining the program’s protections for the U.S. workforce and enhancing enforcement against fraud and abuse."

https://www.federalregister.gov/documents/2019/07/26/2019-15307/temporary-agricultural-employment-of-h-2a-nonimmigrants-in-the-united-states

Comments Close SEPT 24, 2019

 

Proposed Changes to Hours-of-Service Released by FMCSA

Late yesterday the Federal Motor Carrier Safety Administration (FMCSA) released the widely anticipated Notice of Proposed Rulemaking for Hours of Service as they relate to the Electronic Logging Device Rule. 

The National Watermelon Association has been working in cooperation with a number of other produce groups.  We would like to recognize and thank the leaders of Florida Fruit & Vegetable Association - Paul Orsenigo (Chairman) and Mike Joyner (President & CEO) – who began this effort with FMCSA to streamline the Hours-of-Service rules to apply more effectively to agriculture, and in particular fresh fruits and vegetables.  

In the joint petition that was submitted to FMCSA earlier this year, we requested a number of key changes to the rules.  Following is a recap of what we asked for:  

  1. Add an allowance for drivers to rest at any point during their trip without counting this rest time against their HOS allotments.
  2. Exclude loading and unloading times from the 14-hour on-duty HOS calculations.
  3. Allow drivers to complete their trip, regardless of HOS requirements, if they come within 150 air miles of their delivery point (if delivery takes place on any day beyond the original departure work period).

In these new proposed rules, we received some of the allowances that we requested.  They include a more flexible split sleeper berth option and the ability to pause the driver’s ELD for a break of 30-minutes or up to 3 hours at any time during his or her day.  The summary is posted here:

Summary of Hours of Service Notice of Proposed Rulemaking:

  1. Pause the ELD for 30 Minutes and Up to a 3 Hour Break:
    1. Current Rule: Not an option
    2. Proposed Rule: Pause the 14 hour on-duty clock for 30 minutes up to 3 hours consecutively, as long as those hours are taken as off-duty
    3. Provision requires 10 consecutive hours off duty at the end of the work shift
  1. Split Sleeper Berth:
    1. Current Rule: 10/0 split and 8/2 split options
    2. Proposed Rule: Adds a 7/3 split option
  1. 30 Minute Rest Break:
    1. Current Rule: 30 minute break required per 8 hours of on-duty time; taken either off-duty or sleeper berth
    2. Proposed Rule: 30 minute break required per 8 hours of driving time; taken off-duty OR on-duty not driving. Time can be used for filling up gas, restroom, eating, etc.
  1. Short Haul Exemption:
    1. Current Rule: Drivers are exempt from logging in an ELD for 12 hours of on-duty time within a 100 air-mile radius of the source
    2. Proposed Rule: Exempt from logging in an ELD for 14 hours on-duty time within a 150 air-mile radius of the source

                                                               i.      Brings the short haul exemption in line with the current agricultural exemption

  1. Adverse Driving Conditions:
    1. Current Rule: 2 hours extra driving time allowed because of adverse conditions does not extend your 14 hour working day
    2. Proposed Rule: Working day would extend to 16 hours following adverse conditions

The FMCSA full news release (129 pages) can be found online here or the printable PDF here.

Next Steps:

The joint group of produce groups (led by FFVA) will schedule a conference call with FMCSA leadership to further clarify these proposed rule changes and provide the chance to ask questions of the administration.  Following that call, we will provide you with our recommended comments which you may (if you choose) submit to the public record during the 45-day comment period. 

The proposed rules are just that – proposed.  Although the changes have gone through a vetting process within the Administration, they are proposed until such time that the public has had the opportunity to comment, those comments have been taken into consideration, and a final rule is vetted and released.  We are still a ways from seeing any of this become final and applied to the current day trucking rules.  However, we are getting closer.  More will come shortly.  Stay posted.
 
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