We have heard it before. The proposed regulatory changes to the white collar exemption are “imminent.” And, then they were delayed.
Well, the regulations were sent by the DOL to the OMB. The conventional wisdom is that they will be published on June 18, 2015 (I suspect so the DOL can say “Spring”).
We know the purpose and effect of the proposed regulations will be to increase the number of individuals who are non-exempt. At a minimum, exempt status will carry a heavier price tag.
The federal minimum weekly salary is going up—the only question is how high. My prediction: $1,000 per week. My last prediction: 2009 would be good year for stocks.
Also likely: the primary duty test will go from a qualitative to a quantitative percentage test like California. Repeat after me: litigation explosion.
But wait: whenever they come out, they will be only “proposed” regulations. After comments are considered and the final regulations are published, we probably are looking at perhaps another year until the new rules will go into effect.
But that’s not what employees may see. What some employees may see is that they should be non-exempt based on the proposed regulations, and therefore, are owed overtime. Employers need to expect and plan for the inevitable. 5 recommendations:
1. Educate managers on what to say if an employee challenges their status. Without education, a manager might just say “you’re right.” The answer can be as simple as: “The regulations are only proposals but we are studying them and will comply with whatever the final regulations may be.”
2. Consider a memo or small group meetings to address the issue more broadly if the proposed regulations become the topic du jour. This may be particularly important if the proposed regulations shout out, as expected, certain positions as non-exempt. Note: even if not exempt under one exemption, the position still could be exempt under another.
3. Even if you don’t meet with employees proactively, ask managers to report concerns raised by employees about their status to HR. If one manager hears one thing, probably not a group concern. If many do, there is a major issue. You need to have reporting mechanism so you can assess the big picture. Sound familiar: Early detection and rapid response to union organizing;
4. Wait until the proposed regulations come out to evaluate any positions you think may be at risk. Consider structuring the evaluation under attorney-client privilege to minimize the risk of discoverability. This is deceptively complex. Simply sending a cc to your counsel on an e-mail does not make it privileged. It may serve only to make him or her a witness.
5. Be extremely cautious in whether and how you ask employees what they do. If done improperly, the answer may be “sue.” That may be different from asking, after decisions on classifications are made, to confirm that the job description adequately reflects what the employee does, but that is a blog for another day.
Now, buckle your seat belts. It’s going to be a rocky ride.
THIS BLOG SHOULD NOT BE CONSTRUED AS LEGAL ADVICE, PERTAINING TO SPECIFIC FACTUAL SITUATION OR ESTABLISHING AN ATTORNEY-CLIENT RELATIONSHIP
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