Barring eleventh-hour legislative or legal action, the Department of Labor’s (DOL) new rule on overtime pay will take effect on Dec. 1. Independent insurance agencies need to be prepared and informed to avoid potential legal liability.

The new overtime rule requires employers to pay overtime to many employees who were not previously legally entitled to it. Starting Dec. 1, the rule raises by 100%—from $23,660 to $47,476—the monetary threshold at which workers can qualify for an administrative, executive, professional or computer “white-collar” exemption, meaning they do not require overtime pay. The rule also raises from $100,000 to $134,004 the threshold for which an employee can qualify as a “highly compensated employee” who is not subject to overtime. Starting in 2020, both thresholds will automatically update every three years.

To help Big “I” member agencies prepare for the rule, the association created a webpage of compliance resources, which members must log in to view. The website includes a detailed Q&A document, a 30-minute webinar presentation and sample job descriptions, among other resources. A short video update, recorded earlier this week, is also available on the Big “I” website and provides the latest information about the rule. 

Multiple pieces of Big “I”-supported legislation that would delay or phase in the rule are currently pending before Congress. However, the fact that the rule takes effect on Dec. 1 makes the timeframe for Congress to act very short. The Big “I” is also pursuing litigation against the DOL. The judge has agreed to rule on delaying or stopping the regulation before Thanksgiving, but it is not certain that the case will be decided in the association's favor. 

The overtime rule could also undergo changes under the new Trump Administration, such as a carve-out for small businesses or a rollback of the automatic updating provisions. However, since the rule will take effect prior to the new Administration, the President cannot simply halt it. A repeal or any changes would require legislation, or going through the administrative rulemaking process.  

It is also expected that a Trump Administration DOL will be less likely to proactively enforce the overtime rule and other politically charged labor regulations. However, even if the Administration does not actively enforce the overtime regulations, independent insurance agencies would still be subject to legal lability from any private action or employee complaint.

As a new President gets ready to take office, the dust settles on the 114^th Congress and litigation over the rule ramps up, the Big “I” will continue to advocate for agents and brokers, and keep association members informed on any changes. In the meantime, please prepare for the rule’s effective date of Dec. 1.

Jennifer Webb is Big “I” federal government affairs counsel.