Department of Labor Proposes New Overtime Rules

On March 7, the Department of Labor (DOL) released a proposed rule to update the standard for overtime pay eligibility under the Fair Labor Standards Act.  NATSO is currently analyzing the proposal and will produce a more detailed memorandum for members in the coming days. At a high level, however, the rule includes many of the recommendations that NATSO offered during a 2017 DOL Request for Information and the 2014 Obama Administration rulemaking.  
 
Key provisions of the proposal include: 

Salary Threshold – Raises the threshold to $35,308/year ($679/week) by reverting to the methodology used in the 2004 rule that focused on the 20th percentile of full time wage earners in the lowest income region of the company (identified as the South) as well as the retail industry. 

Future Salary Updates – Does not implement automatic updates, but the proposal seeks comment on conducting regularly scheduled rulemakings to update the salary threshold consistent with the methodology used in this proposal.

Duties Test – Makes no changes to the duties tests. 

Highly Compensated Employees – Increases the total annual compensation requirement for “highly compensated employees” from the currently-enforced level of $100,000 to $147,414 per year which is higher than the Obama DOL reg’s threshold of $134,004.  The DOL maintained the methodology used by the Obama administration for this salary level which resulted in the higher threshold.

Salary Test – Would allow nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10 percent of the standard salary test requirement. 

NATSO will be submitting comments on the proposal.  

The Trump Administration is reexamining the rules governing overtime pay in the wake of the Obama Administration's effort being struck down by a federal court. The Obama Administration sought to increase the minimum salary required for overtime-exempt employees to $47,476 annually from $23,660. A federal judge in November 2016 issued a nationwide injunction against the DOL's regulation; the same judge struck down the rule in August 2017.

Because the rule was scheduled to take effect just days after the federal court issued that stay, many NATSO members had already adjusted their practices to conform to the new rule.

In its 2017 comments, NATSO urged the agency to refrain from changing the so-called "duties test" used to determine whether an employee holds an exempt or non-exempt status and opposed the establishment of multiple salary levels (depending on region, industry, etc.). NATSO also urged the agency not to automatically update the salary threshold, but rather review it sporadically to ensure it continues to serve its intended purpose.

NATSO said unduly aggressive changes ultimately would harm businesses and employees by negatively altering hours worked and benefits as well as disrupting some of the most fundamental attributes of running a successful, efficient truckstop.

In anticipation of the Obama Administration's rule, for example, most general managers of quick-service restaurants located in truckstops, as well as some managers of convenience stores operated by truckstops who were previously exempt and paid on a salary basis were converted to hourly to enable employers to more closely track and monitor employee hours. Such transitions often lead to a loss of morale for both line employees and managers. Employees mistakenly view the change as a demotion and managers appear to be at the same organizational hierarchy as the employees they manage.

The current duties test also accommodates a work environment where managers frequently must step in to help their employees to ensure that operations run smoothly, such as stocking shelves or running a cash register in addition to their primary duties as managers.

David Fialkov's photo

David Fialkov

David Fialkov is the Vice President of Government Relations, as well as the Legislative and Regulatory Counsel, at NATSO. In this capacity, Mr. Fialkov directs NATSO's legislative, regulatory, and legal strategy on a range of issues, including transportation, energy and fuels, labor, data security, and taxes. Mr. Fialkov also oversees NATSO's political engagement program, including individualized legal and political counsel to member companies. Prior to joining NATSO, Mr. Fialkov was the senior associate in the Government Affairs and Public Policy practice at the law firm of Steptoe and Johnson in Washington, D.C. At Steptoe, Mr. Fialkov advised clients on legislative, regulatory, and political issues, as well as legal concerns. His primary clients included trade associations representing the motor fuel wholesale and retail industries, including the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America. Mr. Fialkov's focus was not only on the motor fuels business, but also the litany of other issues that retailers confront, including labor matters, foodservice issues, healthcare and employment issues, tax matters and data security. Prior to joining Steptoe, Mr. Fialkov graduated with honors from George Washington University Law School. He received his B.S. Summa cum laude with highest honors from Clark University in Worcester, MA. He lives in Washington, D.C. with his wife Allison and daughter Lilah. More
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