Oh, FLSA Regulations, Where Art Thou?

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Oh, FLSA Regulations, Where Art Thou?

White Collar

By: Quentin Smith

On June 30, 2015, the United States Department of Labor (“DOL”) issued its “proposed” new regulations to revise the white collar exemptions under the Fair Labor Standards Act (“FLSA”). The proposed FLSA regulations would increase the salary test to $50,440 and require that the salary test be adjusted annually. The DOL received about 300,000 public comments on the proposed regulations. But, following the comment period, it became increasingly unclear whether the DOL would issue the final rule prior to the November presidential election or whether the issue would be punted to the next administration.

However, on March 14, 2016, the DOL took a big step in issuing the final rule by submitting its final draft of the FLSA regulations to the Office of Management and Budget (“OMB”). Although OMB can take up to 90 days to complete its review, the Obama administration has a strong incentive for the final rule to be issued within 60 days. There is a little-known statute called the Congressional Review Act that allows Congress to disapprove “major” final rules promulgated by federal agencies. The DOL’s proposed final rule qualifies as a “major” rule because it will have an annual effect on the economy of more than $100 million.

The Congressional Review Act gives Congress up to 60 legislative days to pass a joint resolution that would invalidate any major rule. As long as he remains in office, though, President Obama can veto any joint resolution that would invalidate the final FLSA regulations. However, if the final rule is submitted to Congress with less than 60 days remaining on the legislative calendar, then the next Congress will have a fresh 60-day period to issue a joint resolution that invalidates the FLSA regulations. President Obama would then no longer be in the Oval Office to veto that joint resolution.

According to the Congressional Research Service, the day of reckoning is May 16, 2016. If the DOL’s new regulations are not issued by that date, then the new FLSA rule will be at the mercy of the next Congress and the next President. If President Trump or President Cruz has been elected, the new FLSA regulations would be dead on their arrival to the Oval Office. Even if President Clinton has been elected, there is a risk (albeit small) that the new Congress could override her presidential veto of a joint resolution invalidating the new FLSA regulations. The Obama administration is unlikely to take that risk. So, after much waiting, employers should expect to see the new FLSA regulations put in place by May 16.