UPDATE (5/27/2015): The DOL sent draft FLSA regulations to the Office of Management and Budget on May 5, 2015 for approval prior to their public release. For the most current updates on the status and content of these new regulations, please see our series of posts on this topic.
Late last month, the Department of Labor released its Fall 2014 Agency Rule List that included a range of proposed regulations covering everything from the FMLA definition of “spouse” to labor union annual reports and persuader rules. Most importantly for readers of this blog, though, the DOL added an entry to its list for a proposed rule to implement President Obama’s directive to modernize and streamline FLSA regulations for executive, administrative, and professional employees. The DOL now expects to publish the rule by the end of February 2015, according to this filing with the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA).
Like the required Semiannual Regulatory Agenda that we covered earlier this year, this list is not binding on the DOL. The Semiannual Regulatory Agenda had originally promised new draft regulations by November, but the Department delayed the release in October. The FLSA provides for overtime exemptions (and minimum wage exemptions, in some cases) for employees who are employed in a bona fide executive, administrative or professional capacity, or in the capacity of an outside salesperson. On March 13, 2014, President Obama directed the Secretary of Labor to modernize and streamline existing overtime regulations for executive, administrative, and professional employees.
As we have discussed in the past, any proposed changes to the overtime regulations are subject to the federal Administrative Procedure Act’s rulemaking process, which means the administration would need to complete a number of time-consuming steps before any rule change could take effect. These steps include the proposed February 2015 notice of proposed rulemaking followed by a public comment period. Then, the DOL would need to hear testimony, consider public comments, and have a final version of the revised regulations approved by OIRA. Typically, the public comment period will extend at least 30 days. After, the DOL drafts a final regulation that responds to any public comments, OIRA would then conduct a final review, approve the text of the regulation, and publish it in the Federal Register. The period for the Office to review a draft regulation is limited by an Executive Order to 90 days, with the possibility of a single, 30-day extension. While there is no minimum period for review, the average review time in past years has been approximately two months. Therefore, even with a short 30-day comment period and a quick turnaround on a final rule, the DOL is unlikely to have any new regulation in place before summer 2015. Even if the administration can push through the new regulations before the end of President Obama’s term, affected parties are likely to file legal challenges to any revisions, which could potentially delay their implementation further.
The Agency List contains some other interesting tidbits from the DOL as well. Other than the final rule on the FMLA definition of “spouse,” slated to be finalized in March 2015, the Wage and Hour Division also plans to finalize the implementing regulation for Executive Order 13658. On October 7, the DOL published a final rule on this Executive Order, which raised the minimum wage for federal contractors to $10.10 per hour, with future increases indexed to inflation. The rule takes effect on December 8. Notably, the “Right to Know Under the Fair Labor Standards Act” proposal that appeared on the Semiannual Regulatory Agenda does not appear on the Rule List, meaning that any potential action on this proposed regulation remains a long way off, if it will be released at all. The “Right to Know” regulation would “enhance the transparency and disclosure to workers of their status as the employer’s employee or some other status such as independent contractor, and if an employee, how their pay is computed.” The DOL has been delaying this proposed rule since early 2011.