Hunton Employment & Labor Perspectives

As we previously reported, the Department of Labor (“DOL”) issued a proposed rule expected to significantly increase the number of employees who are eligible for overtime. Most notably, the proposed rule seeks to increase the minimum salary threshold for exempt workers from the current level of $23,660 to $50,440.

In a December 16, 2015 interview with Bloomberg BNA, Secretary of Labor Thomas Perez stated he was “confident” that the final rule would be “out by the spring of next year.” This prediction falls ahead of other recent DOL estimations. In its latest regulatory agenda, released in November, the DOL’s Wage and Hour Division estimated that the final rule would be published in July of 2016. And while speaking on a recent panel at the American Bar Association’s Labor and Employment Law conference in Philadelphia, Solicitor of Labor M. Patricia Smith predicted that the new rule was not likely to appear before “late 2016.”

Commentators have suggested that the earlier the final rule is issued, the less vulnerable it will be to a Republican legislative challenge under the Congressional Review Act (“CRA”). The CRA empowers Congress to pass a joint resolution disapproving of new federal regulations issued by government agencies within 60 days’ of the rules’ release. Once a Congressional resolution of disapproval has been passed, the regulation at issue is invalidated if the President of the United States signs the resolution or, despite a Presidential veto, the resolution is passed by a two-thirds vote of both houses of Congress. The later the final rule is released, the more likely it is that the 60-day CRA challenge period could run into a new—potentially Republican—presidential administration. This in mind, by aiming to release the final rule in the spring of 2016, the DOL is likely attempting to prevent a successful CRA challenge.

Even if the new rule is released this spring, however, it will not be immune from other attacks. For example, business groups may attempt to challenge the rules under the Administrative Procedure Act by claiming that the rules are “arbitrary and capricious” and are an “abuse [of the DOL’s] discretion.”

We will continue to monitor the final release of the new overtime rule, as well as any legal challenges it faces upon issuance. In the meantime, employers should begin contemplating how they will comply with the new regulations—under which the DOL predicts roughly 4.6 million currently-exempt workers will be entitled to overtime protection.