I have blogged before on the “eagerly” anticipated DOL revisions to the white collar exemption regulations. This initiative is designed to narrow the white collar exemptions to the Fair Labor Standards Act and would make possibly millions of additional employees overtime eligible.
The proposed rule is now expected this month, but its expected content is still vague. Two things are certain—the salary threshold for exemption (now set at $455 per week) will be significantly raised and there will likely be a “quantitative test,” meaning the setting of a definite/specific percentage of time that workers must spend performing exempt work to qualify for one of the exemptions.
One thing is even more definite—there will be a spike in the already large volume of misclassification lawsuits that already fill judicial dockets. This is because there will continue to be publicity concerning the new proposals and employees may have new reason to question (or think about) their current classification status. Concomitant to this will be the increase attributable to plaintiff-side lawyers scrutinizing the regulations and probing for weakness, meaning opportunities, in the employer/business community. Note that after the revised regulations took effect in 2004, there was a significant rise in FLSA cases.
As to the salary increase, one view might be that this is a good thing, as the line of demarcation between exempt and non-exempt would be made automatically brighter and employers would know, off the bat, that if they refused or could not pay workers the enhanced salary, those workers were non-exempt. In other words, by raising the salary threshold, large groups of workers would be non-exempt, meaning there would be fewer groups for lawyers to fight about. That would be a good thing.
The bigger issue or threat may be the second potential change, which would set a minimum percentage of time that exempt work must be performed. California currently uses such a quantitative standard, i.e., 50%. Now, under the FLSA, an employee can be exempt even if they perform less than 50% exempt work because a worker’s “primary duty” means the “principal, main, major or most important duty that the employee performs.” Setting a definite percentage might, by itself, spur litigation because evidence that 50% (or more) exempt work is being performed may be tough to demonstrate.
If the proposed regulations will change the primary duties test for these exemptions, then, depending on how extensive those changes are, there would/will be a significant increase in litigation. Part of the underlying issue is for the DOL, the Congress and the courts to try to apply a Depression-era piece of legislation to the modern, technology-driven workplace.
Implementing a quantitative duties test will be at first a spur to litigation but it may also make employers much more careful (that is, conservative) in their classification decisions. That may, ultimately, be a good thing for the business world.