Time to Look at Overtime


As President John F. Kennedy said, "the time to repair the roof is when the sun is shining." The United States Department of Labor's proposed overhaul of its white collar exemption to overtime eligibility is not yet in effect. Absent something unexpected happening, like the federal courts invalidating the rule (9/1/2017 UPDATE - Texas Federal Court invalidated the rule!), employers should revise their policies to reflect that the minimum salary to be exempt from overtime shall be raised from $455 a week (the equivalent of $23,660 a year) to $913 ($47,476 per year) in 2016. US DOL Website (updated). The new rule takes effect December 1, 2016.

During the interim period until the new DOL rules take effect on December 1, 2016, prudent employers are consulting with HR and legal counsel in order to examine their job descriptions, pay rates and overtime policies NOW. Waiting for the new rules to come out before acting is reactive rather than proactive, and has the possibility of making things much worse. Unionized employers should take special care to consider the impact of being questioned for giving raises to employees in order to get them over the $47,476 threshold, and see whether their unions would be amenable to job reclassifications before the new proposed regulations become effective.

Many employers have on their books workers with job descriptions that are inconsistent with the workers' actual functions, which, if examined, is certain to cast doubt on an employee or independent contractor's overtime status and open the employer up to DOL audits or litigation. Recent case law in New Jersey has greatly limited the definition of an "independent contractor", which could also expose a reactive employer to wage and hour liability. At Plosia Cohen, we encourage employers to get ahead of the wave of overtime litigation that is likely to coincide with the US DOL's amendments to its regulations, and take an inventory of their employee job descriptions, independent contractor arrangements and overtime policies sooner rather than later.

For more information on this subject, come see Jonathan F. Cohen of Plosia Cohen LLC speak on the topic at the annual Rutgers School of Management and Labor Relations Spring Seminar on May 13, 2016(LINK), the May 2, 2016 New Jersey Labor Employment Relations Association dinner seminar on the subject (LINK), or contact our firm.


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