Impact of Proposed Overtime Regulations

On Monday, July 6th, 2015, the Department of Labor released a proposed rule to update the regulations defining and delimiting the exemptions for “white collar” employees. These regulations are a result of President Obama’s 2014 Presidential Memorandum to update and modernize the overtime regulations. Please click here for last year’s Chamber post.

The Maryland Chamber has been following this issue since President Obama’s announcement, and is currently preparing to submit comments to the US Department of Labor on the effects the proposed rule would have on Maryland employers. The proposed rule, overall, seeks to:

• increase the salary level threshold for exemption from $455 per week ($23,660 per year) to $970 per week ($50,440 per year), effective 2016
• increase the total annual compensation requirement needed to exempt highly compensated employees to the annualized value of the 90th percentile of weekly earnings of full time salaried workers (approx. $122,148 annually)
• establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption

The Maryland Chamber of Commerce is seeking your feedback in the following areas:

• What specific additional examples of nonexempt and exempt occupations should be added to the Executive, Administrative and Professional exemptions?
• Should there be any changes made to the duties tests?
• Should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for exemption? If so, what should that minimum amount be?
• Should the Department look to the State of California’s law (requiring that 50 percent of an employee’s time be spent exclusively on work that is the employee’s primary duty) as a model? Is there another threshold that is less than 50 percent of an employee’s time worked a better indicator of the realities of the workplace today?
• Does the single standard duties test for each exemption category appropriately distinguish between exempt and nonexempt employees? Should the Department reconsider its decision to eliminate the long/short duties tests structure?
• Is the concurrent duties regulation for executive employees (allowing the performance of both exempt and nonexempt duties concurrently) working appropriately or does it need to be modified to avoid sweeping nonexempt employees into the exemption?
• Alternatively, should there be a limitation on the amount of nonexempt work? To what extent are exempt lower-level executive employees performing nonexempt work?
• Does your industry commonly offer non-discretionary bonuses, incentive payments or commission? If so, how frequently are such payments made and to what types of employees? To what extent would including these employees as part of salary level be helpful to business? Would a cap or maximum of 10% of the minimum salary be an appropriate limit?

We need your feedback. Please share your thoughts, questions, comments and concerns regarding the proposed regulations and questions as well as how these changes would affect your business.  Send your feedback to Deriece Pate Bennett at dpatebennett@mdchamber.org

To view the proposed regulations and other fact sheets, please visit the Department of Labor’s website.

Categories: In the NewsLegislative Issues Tag: Employment Issues