DOL Announces New Overtime Audit Program



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The DOL’s PAID program hopes that voluntary audits will result in better compliance with overtime and minimum wage requirements.

On March 6, 2018, the United States Department of Labor’s Wage and Hour Division (“WHD”) announced a new, voluntary audit program aimed at improving employers’ compliance with overtime and minimum wage requirements.  The program is called the Payroll Audit Independent Determination (“PAID”) program.  Here is a link to the DOL’s question-and-answer sheet on PAID:  Coming Soon: PAID

At this point, details on the program are scarce.  It will be a pilot program for six months, after which WHD will evaluate its effectiveness.  All employers covered by the Fair Labor Standards Act (“FLSA”) will be eligible to participate.  Employers will self-audit their compensation practices and identify potentially non-compliant wage practices.  They will then identify the potential violations to WHD.  Potentially, employers can benefit from this program because WHD will not require them to pay liquidated damages or civil monetary penalties for any voluntarily-disclosed violations.

WHD’s Acting Administrator, Bryan Jarrett, wrote an op-ed for The Hill discussing the new program, and it can be found here:  PAID Program a Win-Win-Win.  One interesting aspect of Mr. Jarrett’s op-ed is his observation that current laws prevent “employers from simply paying the wages due to conclusively settle overtime or minimum wage violations.”  That statement correctly recognizes that the only way to conclusively settle an FLSA claim is through litigation and a settlement in which a Judge finds the settlement fair and reasonable for the employee.  Rather than facing the issues arising from such suits, some employers simply refuse to pay money legally owed to an employee.

As with any new area of the law, the devil is in the details.  I will keep an eye out for details on the PAID program as they emerge, and attempt to keep you up-to-date.

Overtime Regulation Struck Down

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The Department of Labor’s Overtime Regulation Was Struck Down By a Federal Judge.

Yesterday, United States District Court Judge Amos Mazzant struck down a Department of Labor overtime regulation which increased the threshold for salary exemption under the Fair Labor Standards Act from $23,000 per year to $47,476 per year.  Here’s an article from The Hill discussing Judge Mazzant’s ruling:  Texas Judge Strikes Down Obama Overtime Rule

I wrote about the overtime regulation when it was released, here:  Overtime Rule Released.  After the regulation was released, numerous interested parties filed suit in Judge Mazzant’s court challenging the regulations, and he issued a preliminary injunction, which prevented the regulation from going into effect:  Judge Halts Overtime Regulation

The DOL under the Obama administration was not satisfied with Judge Mazzant’s ruling and filed an appeal with the Fifth Circuit Court of Appeals:  DOL Appeals Overtime Ruling  That appeal remains pending, but many attorneys believe that the DOL under the Trump administration may abandon the appeal.  I will keep you updated as the appeal progresses.

DOL Appeals Order Halting Overtime Regulations

DOL Appeals Overtime Regulation Order
The Department of Labor has appealed an order which halted new overtime regulations

Yesterday, the United States Department of Labor filed an appeal challenging an order which halted DOL’s new overtime regulations.  Those new regulations were scheduled to go into effect on December 1, 2016 and would have raised the minimum salary for exempt employees to $47,476.00.  I previously wrote about the injunction which stopped the new regulations here:  Federal Judge Halts New Overtime Regulations!

In a “normal” case, an appellate court can take a year or longer to issue a decision on an appeal.  Most likely, this appeal will be fast-tracked by the Fifth Circuit Court of Appeals.  Even so, employers should not expect a decision any earlier than some time in the first quarter of 2017.  Here is the DOL’s press release concerning the appeal:

Federal Contractors: Minimum Wage Increases to $10.20

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The minimum wage for employees of federal contractors will increase on January 1, 2017

The minimum wage for employees of many federal contractors will increase to $10.20 per hour effective January 1, 2017.  President Obama’s Executive Order 13658 established a minimum wage for contractors working under four major categories of federal contracts:

  1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
  2. Service contracts covered by the Service Contract Act (SCA);
  3. Concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
  4.  Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

Effective January 1, 2015, the minimum wage was set at $10.10 per hour, and that wage has seen five cent increases over the last two years.  On September 20, 2016, the United States Department of Labor announced the increase for 2017.  The notice of wage increase and an updated workers’ rights poster can be found here:  Minimum Wage Increase


Breaking News: Final Overtime Rule Released



Yesterday, the United States Department of Labor released its highly-anticipated (and much-debated) final rule regarding overtime compensation.  Here is a link to the Department of Labor’s Fact Sheet on the new rule:  DOL Fact Sheet on New Overtime Rule

Prior to release of the rule, every prognosticator was trying to predict the new threshold salary for exempt employees.  Currently, that salary is $23,660.  Under the new rule, the threshold salary is $47,476.  That is a massive increase for employers.

The new rule becomes effective on December 1, 2016.  On that date, employees with an annual salary of $47,476 or less must be paid overtime.  I previously advised that employers should begin planning for the new rule here:  What Would Saban Do? Preparation for DOL’s New Overtime Rules  If you have not done so, it’s time to conduct a wage audit of your employees and make difficult decisions regarding salaries.

What Would Saban Do? Preparation for DOL’s New Overtime Rules


businessman-311337_640 (1)We all procrastinate.  Give us a deadline and we’ll wait to the last minute to complete the project.  At the University of Alabama, Nick Saban has rejected that tendency and turned The Process into forward thinking preparation.  While college football players aren’t entitled to overtime compensation, employers can adopt some principles of The Process and start preparing for the Department of Labor’s new overtime rules.

The release-date for the new overtime rules is unclear.  The Department of Labor’s Fall 2015 Unified Agenda stated that the anticipated release date would be in July 2016.  However, in November of 2015, Solicitor of Labor M. Patricia Smith said the rules wouldn’t be issued until “late 2016”.

If you start preparing now, the uncertainly of the release date won’t have as much impact on your business.  We know that the threshold salary to exempt employees from overtime is going to increase.  Right now, an employee making a salary of $23,660 can potentially be exempted from overtime requirements.  In other words, if you pay an employee a minimum salary more than $23,660 and they perform certain executive, administrative or professional duties, you don’t have to pay them overtime.

That threshold amount is going to increase.  The Department of Labor’s draft rule proposed to increase the salary requirement to $50,440 — which is the 40th percentile for full-time salaried workers in America.  Legal pundits believe there is some potential for compromise on the amount, but everybody agrees there will be an increase.  The 35th Percentile is $44,304 per year and the 30th Percentile is $40,196 per year.

Potentially, your business has employees who are making more than the current threshold of $23,440, but less than the potential new threshold — and you are not paying them overtime.  But, under the new DOL regulations, you could be required to pay them overtime.  Start identifying those employees now.  Also, you need to be thinking about tough internal policy decisions.  Do you increase the salary of those employees to “bump” them over the new threshold?  Do you actually lower their salary to account for the overtime that they will now accrue?   Do you take the “hit” to your profitability and keep their salary the same — plus pay overtime.

The new regulations will unquestionably require businesses to make difficult decisions.  But, following The Process, preparing early, and clearly communicating changes to employees can make the transition less difficult.