The Department of Labor has asked if employing multiple salary levels for white-collar overtime exemptions is a good idea and in its request for information (RFI) on July 25, it suggested more complex alternatives to the Obama administration rule - which has been blocked.  This included adjusting the levels according to different costs of living in different states. 

It added that gathering public input on the following questions will aid in the development of a notice of proposed rulemaking:

• Should the regulations contain multiple standard salary levels?  If so, how should these levels be set - by size of employer; census region; census division; state; metropolitan statistical area or some other method
• Should there be multiple total annual compensation levels for the highly compensated employee exemption
• Would updating the 2004 salary level for inflation be appropriate and, if so, what measure of inflation should be used
• Should the standard salary level and the highly compensated employee total annual compensation level be automatically updated on a periodic basis

Alexander Passantino, an attorney with Seyfarth Shaw and former acting administrator of the DOL's Wage and Hour Division said, "Employing a cost-of-living-based salary test certainly would address a number of the concerns raised by employers in the previous go-round.  "A salary level that works for New York [City] or D.C. does not necessarily work for the rural South. Because of the way the duties test works in connection with the salary, however, the reverse is not necessarily true. The salary is a screening mechanism; if it is low enough to ensure we are not inappropriately screening out exempt employees in the rural South, it likewise serves that function in New York City."

The attorney went on to say that the DOL will have difficulty implementing different salary levels due to the fact that it will be hard to establish exactly where an employee works.      He added, "Imagine a company incorporated in Delaware with headquarters in New York; a regional office in Denver; a field supervisor working out of his home in Santa Fe who services a district covering El Paso, Texas, to Phoenix.  Then imagine he spends half his time in the Denver office and half his time working out of his home. The DOL would need to provide guidance on how to apply the proper salary level, which would be much more challenging for the department than setting one standard salary level. The multiple standard salary levels are "a great idea in principle—somewhat difficult in application."

Alfred Robinson Jr – an attorney in Washington D.C. and former acting administrator of the Wage and Hour Division, commented on the multiple standard levels by stating it ".......could result in some positions and employees being classified differently in different regions of the country even though they perform the same job duties."

Conversely, Jeffrey Brecher - an attorney with Jackson Lewis in Melville, N.Y. – said, "One of the criticisms of the original final rule was that it established a salary level that more than doubled the prior salary level and took no consideration for differences in salary levels among geographic areas. So setting a standard salary level that makes adjustments based on geographic location makes sense. Employers are used to variations in salary levels at the state-law level, so this is something the DOL will likely give serious consideration."