On March 7, the Department of Labor (DOL) unveiled a long-awaited proposal to make roughly 1.1 million more workers eligible for overtime pay. The new proposal would update the Fair Labor Standards Act (FLSA)’s overtime exemptions for executive, administrative, and professional, or EAP, workers and replace the rule released under the Obama administration.

Under the proposed rule, workers who make $35,308 or less per year, or $679 per week, would be automatically eligible for time-and-a-half pay for all hours worked beyond 40 hours a week. This is an increase from the current salary threshold of $23,660, or $455 per week. Though higher than the current threshold, the rule is not as high as the $47,476 mark proposed by the Obama administration that had been enjoined by a federal court in Texas in 2016.

A few other important details about the proposed rule:

  • The proposal does not establish automatic, periodic increases of the salary threshold as the Obama administration proposal had. Instead, the department is asking the public to weigh in on whether and how the DOL might update overtime requirements every four years;
  • It does not tinker with the current “duties test,” a checklist used to determine whether workers making more than the salary threshold are supervisors, not entitled to overtime wages;
  • For highly-compensated employees, the DOL raises the salary threshold from $100,000 as it was in the 2004 rule to $147,414;
  • The rule allows certain non-discretionary bonuses and incentive payments, like commissions that workers receive, to count for up to 10 percent of a worker’s salary level; and
  • The DOL estimates that the rule will take effect in January 2020.

The salary threshold was last increased in 2004, during the George W. Bush administration. In setting the new salary level, the DOL said it arrived at those figures by applying the same methodology that was used to set the 2004 threshold, which they say should protect the proposal from litigation. However, the proposal is expected to be met with lawsuits and criticism from both sides of the issue.

Once the proposed rule is published in the federal register, the public will have 60 days to submit comments electronically at regulations.gov, in the rule-making docket RIN 1235-AA20.

Read more from the Department of Labor here, along with its Fact Sheet and FAQ on the Proposed Rule.

Denise Bode
Bio Link Denise co-leads the federal practice at Michael Best Strategies with expertise in association and coalition management as well as development of public policy strategies, at both the state and federal level. She was active, on behalf of firm clients, during the recent federal tax reform debate, much as she was during the last major tax reform in 1986. Expertise: Regulatory Law, Tax & Trade, Energy, Environmental, Food, Agriculture, and Telecommunications

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