FLSA OVERTIME REGULATIONS UPDATE

March 17, 2004

By Jeffrey A. Schwartz

Based upon information we have received, we are still anticipating that the new amendments to the overtime exemptions for "white collar" employees under the Fair Labor Standards Act will be published by the Department of Labor by the end of this month. As we have previously noted, the proposed changes to the five-decade old DOL overtime regulations involved fierce congressional debate, with the proposed regulations avoiding defeat with the passage of a spending bill in January. We anticipate that the final rules will involve some changes from the one's that were proposed by the DOL last year.

The proposed change that has sparked the most controversy involves the way in which the DOL would in the future evaluate a salaried employee's duties to determine whether he or she is exempt from overtime as an executive, professional, or administrative employee. This being an election year, purported opponents of these proposed changes have threatened to use legislative blocking measures to prevent the new rules from taking effect. Some have also threatened litigation pursuant to the Congressional Review Act, which establishes a procedure to rescind agency regulations. Some of you may recall, that this law was successfully employed by those who opposed the stringent ergonomics standards OSHA had promulgated under the Clinton administration.

The DOL may consider some compromise measures to prevent blockage. One potential change from the March, 2003 proposed regulation could be the elimination of the so-called "super salary test." As you may recall, the new regulations contained a provision that would have created a significantly relaxed exemption for employees who earned a yearly salary of at least $65,000. There has been significant criticism of this provision and it is conceivable that it could be absent from the final regulations.

Lastly, it remains unclear what the compliance period will be once the DOL regulations become final. We have heard that there will be anywhere from a sixty to ninety day window by which employers will need to ensure that they are properly classifying who is and who is not exempt from overtime. We will continue to monitor developments and will be prepared to assist you with evaluating what if any changes you will need to make with regard to your overtime pay practices. In the meantime, please do not hesitate to contact the author or any of the attorneys in our Labor and Employment practice group to discuss these or any other recent developments.

Jeffrey A. Schwartz is a shareholder in the Firm's Labor and Employment Practice Group and resides in the Firm's New Orleans office. He may be contacted at (504) 522-8788 or you may e-mail him at jschwartz@watkinsludlam.com.