Dive Brief:
- If you ask the Department of Labor, private wage and hour litigation claims should go down when the department's new overtime rule takes effect on Dec. 1. Employment lawyers are not as sure, with most of them saying the actual impact on litigation is unpredictable, according to Bloomberg BNA.
- Seth Harris, a former Obama administration deputy labor secretary, told Bloomberg BNA, that he's unsure if the new rule will slow down the record number of lawsuits filed under the FLSA. “I think that there are vectors pointing in different directions," he said.
- Most observers do agree, however, that the rule should lessen employees' need to sue for unpaid time-and-a-half wages. By doubling the salary threshold to $47,476, it would seem pretty clear for employers in most situations who is owed overtime. But, as with any new rule or law, that may not turn out to be the case, say experts.
Dive Insight:
Wage and hour legal experts, for example, told Bloomberg BNA that FLSA lawsuits could continue to happen due to factors such as illegal reclassification strategies or other moves used to reduce payroll costs by employers.
Plus, with all the media exposure swirling around the new rule as well as outreach education, workers are more aware of the issue today than in the past, said Harris.
Another complication is the FLSA's duties test, which has not changed under the new rule but often was ambiguous when it came time for courts to decide if workers are misclassified as exempt from receiving overtime. Even with potential for continued wage and hour litigation, the new, much higher threshold removes the duties test applicability for millions of employees newly protected by the salary-basis test.
“If someone's paid less than $47,476 per year, it doesn't matter if they're the CEO of the company—they're not exempt,” Eric Magnus, a principal at Jackson Lewis P.C., told Bloomberg BNA. “It's a lot easier to prove that than to bicker around with opposing counsel."
