U.S. Labor Department Continues its Review of White Collar Overtime Pay Rules

As we approach the two-year mark since amended regulations for white collar overtime pay were set to go into effect under the Obama administration, the U.S. Department of Labor continues to collect information anew as part of its reevaluation of the rules under Donald Trump. Later in October, the Department will hold what’s it’s calling a “listening session” in Washington, D.C. It is seeking input on several questions, including:

  • What is the appropriate salary level (or range of salary levels) above which the overtime exemptions for bona fide executive, administrative, or professional employees may apply?
  • What benefits and costs to employees and employers might accompany an increased salary level?
  • Should the Department more regularly update the standard salary level and the total-annual-compensation level for highly compensated employees?

It’s unclear whether or when new white-collar regulations will take effect. Following a review process that lasted more than two years and included hundreds of thousands of public comments, the Department of Labor planned to implement new regulations on December 1, 2016. The changes would have required that, if white-collar workers were to be exempt from overtime pay requirements, they earn at least $913 per week, roughly $47,000 annually, rather than the $455/week the rules now require. Highly paid workers in this category would have become exempt only if they earned $134,000 per year, up from the current $100,000. And the Department would have added an automatic updating mechanism to address inflation.

The Department’s plans were altered just after the November 2016 election of Mr. Trump when a Texas court blocked implementation of the Department’s new regulations. The Trump administration accepted the decision without substantive challenge after the Obama administration defended it for a time. The Department began its current review about a year ago.

With the New Equal Pay Act Set to Take Effect on July 1, 2018, it’s Time for Employers to Evaluate their Wage Practices

The effective date of the new Massachusetts Equal Pay Act is fast approaching, and employers who have not yet begun to evaluate wage disparities between men and women need to start the process. Beginning July 1, 2018, the revised law will require that employees be paid equally for work involving similar skill, effort and responsibility. Analyzing existing wage disparities and making progress to address them will help shield employers from double the amounts of wage disparities and other penalties under the Equal Pay Act.

The new Equal Pay Act revises an existing law that, due to court interpretation, has been effectively useless to address wage disparities. It mandates that all workers be paid the same for “comparable” work regardless of gender and bars companies from ordering their employees not to talk about their pay. Courts evaluating Equal Pay Act claims will ignore job titles and focus on whether jobs require “substantially similar skill, effort and responsibility” and are “performed under similar working conditions.” Penalties under the Act are substantial and include the payment of employee legal fees, but can be abated or avoided completely by self-evaluation and concrete action in advance of July 1, 2018. Implementation of the law was delayed two years from its passage in July 2016 to provide employers time to address pay disparities.

Employers who haven’t yet done so should proceed quickly to determine whether wage inequity exists. Doing this with the assistance of counsel, either in-house or from outside the company, should permit the initial findings of an Equal Pay Act audit to be kept confidential. This makes sense given the existence of a federal law on equal pay that does not shield audits in the same way the Massachusetts Equal Pay Act does. Once an initial audit is completed, employers should decide with the advice of counsel how to address the results and whether more audit work is needed. Under the Massachusetts Equal Pay Act, progress on abating unequal pay is required before the audit will be a useful defense to suit.