In March 2019, the U.S. Department of Labor (DOL) proposed a rule that would increase the minimum overtime salary threshold, converting more than one million now overtime-exempt workers to non-exempt, overtime-eligible employees.
Currently, the so-called “white collar” exemptions under the Fair Labor Standards Act provide that employees who are paid a salary of at least $455 per week ($23,660 per year) and primarily perform executive, administrative, or professional duties (the “job duties test”) need not be paid overtime.
Under the proposed rule, the salary threshold necessary to qualify for a white collar exemption under federal law would be increased approximately 50% to $679 per week ($35,308 annually). If adopted, this rule will mean that employees who are now exempt under the executive, administrative, or professional exemptions, but earn a salary less than $35,308 annually, will become non-exempt and will have to be paid their hourly rate plus an overtime premium for all time worked in excess of 40 hours in a work week. To avoid exposure to overtime pay for these employees, employers would be required either to increase the salary of each of these employees to at least the new threshold – potentially a nearly $12,000 per annum increase – or manage the employee’s schedule closely to ensure they do not work overtime.
The DOL is accepting comments on the proposed rule. Comments are due by May 21, 2019, and should address the economic impact of this rule on your organziation, as well as recommendations on regulatory options that may minimize the cost of this rule. Submit electronic comments here.
Once comments are received and reviewed, the DOL will publish a final rule (likely around January 2020).