New Wage and Hour Regulations May Impact Tribes
On May 23, the U.S. Department of Labor (DOL) issued new wage and hour rules under the Fair Labor Standards Act (FLSA) that most employers, including tribes, will be required to comply with by Dec. 1, 2016.
The FLSA, one of the pillars of U.S. labor law, was enacted in 1938. It provides a minimum wage and standard 40-hour work week for non-exempt workers and requires employers to compensate employees at 150 percent of their hourly wages for hours worked beyond 40 hours in a workweek. Workers employed “in a bona fide executive, administrative, or professional capacity” are exempt from the minimum wage and overtime protections if (1) the employee is paid a fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed, (2) the amount of salary meets a minimum specified amount, and (3) the employee’s job duties primarily involve executive, administrative, or professional duties.
The new rules increase the salary threshold component, last raised in 2004, to an amount equal to the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage census region, currently the South. The rules will raise the salary threshold from $455 per week ($23,660 for a full-year worker) to $913 per week ($47,476 for a full-year worker). Employers will be required to pay workers earning less than the revised salary amount one and one-half times their normal hourly wage for hours above 40 hours per workweek. The new rule also raises the salary threshold on the “highly compensated employee” exemption to $134,004 per year. The U.S. Department of Labor will revise the salary thresholds every three years. The salary threshold for white collar exemptions is more than double the minimum salary currently guaranteed to most exempt employees.
Several tribes and tribal organizations opposed the new rules, citing the potential reduction in enterprise revenues and the consequent adverse impacts on their ability to fund tribal government services. The DOL rejected these concerns:
Likewise, the Gila River Indian Community and the Ute Mountain Ute Tribe submitted comments urging the Department to ‘‘open consultation with Indian tribes on the use of a lower salary threshold for tribal entities’’ based on ‘‘the unique economic and demographic factors that tribes face.’’ The Department did not propose special treatment for small businesses, tribal governments, or other entities, and did not request comment on these issues. The Department believes such special treatment is not necessary given that the Final Rule modifies the proposed rule by basing the standard salary level on salaries in the lowest-wage Census Region and this lower final salary level will provide relief for these stakeholders. …
Several commenters writing on behalf of tribal governments similarly asserted that tribes would be forced to respond to the proposed salary level increase by reducing services to tribal communities. The Jamestown S’Kallam Tribe stated that
‘‘requiring Tribal business to ‘transfer income’ to employees takes money not only out of tribal governments, but to the economy of the surrounding communities as tribes provide enormous employment opportunities to the non-native communities.’’ …
As discussed in this Final Rule, the Department has modified the proposed rule by setting the salary level equal to the 40th percentile weekly earnings of full-time salaried workers in the lowest wage Census Region (currently the South). We believe that this adjustment will provide relief for state, local, and tribal government employers, as it does for employers in low-wage areas and industries. …
The Department … expect[s] employers to respond in a variety of ways to changes in salary level, and the manner in which an employer responds will affect how the employer (and its employees) is impacted. In response to comments suggesting the implementation of a special salary threshold or an exemption for state, local, or tribal government employers, the Department did not propose any different treatment for employees of state, local, or tribal government employers or ask any questions in the [Notice of Proposed Rulemaking] about such a change; therefore, webelieve the special provisions sought are beyond the scope of this rulemaking.
See rules at 81 Fed. Reg.