THE PROPOSED NEW DEPARTMENT OF LABOR OVERTIME RULES – When will they go into effect? What will they mean to you?

January 21, 2004

By Jeffrey A. Schwartz and Horace A. (Topper) Thompson

Last year, the United States Department of Labor proposed new regulations that if implemented will dramatically change how the DOL determines whether employees are or are not exempt from overtime pay for hours worked in excess of forty in a workweek. These changes could result in significantly reduced labor costs for many employers. Official sources are indicating that the regulations will go into effect in March 2004. Employers will then have up to ninety days to ensure that they are in compliance. The Senate has, however, repeatedly tried to delay implementation by preventing a comprehensive spending bill from passing into law. Those blocking that bill have stated that they want the DOL to revisit the overtime rules. Just yesterday (January 20th), the Senate again blocked the omnibus spending bill in yet another effort to prevent the DOL rules from taking effect. Close Senate observers have suggested that the bill will soon pass which should enable the DOL to proceed with their new rules. (There remains the possibility that the DOL will reconsider the regulations in light of the strong union-based opposition it has received). We will continue to monitor these developments and alert you as soon as it becomes clear that the DOL will implement the new overtime regulations. We believe that many of you might be able to make significant changes in your employee classifications that will reduce your labor costs. We are prepared to discuss with you how to go about those changes to become compliant with the regulations in a way that will result in cost savings. Please be on the lookout for additional e-news bulletins addressing this important topic. In the meantime, please do not hesitate to contact the authors or any of the Watkins Ludlam Winter & Stennis attorneys you normally communicate with if you would like additional information about the proposed new overtime rules.

Jeffrey A. Schwartz and Horace A. (Topper) Thompson are shareholders in the Firm's Labor and Employment Practice Group and reside in the Firm's New Orleans office. They may be contacted at (504) 522-8788 or you may e-mail them at jschwartz@watkinsludlam.com or tthompson@watkinsludlam.com.