Yesterday, the U.S. Department of Labor released its long-awaited updated overtime rule proposal. Under the proposed rule, the minimum salary level at which an employee can be exempted from federal overtime and minimum wage requirements (assuming other criteria are met) would increase from $455 per week ($23,660 annually) to $679 per week ($35,308 annually). If enacted, more than a million more workers would become eligible for overtime under the proposed rule.
As you may recall, in 2016, the Obama administration issued a new overtime rule, which would have raised the salary-level test for executive, administrative and professional workers to $913 per week ($47,476 annually). Before that rule took effect, however, a federal judge struck it down, finding that the DOL exceeded its authority when it more than doubled the salary-level set by the 2004 overtime rule. Since then, the fate of the overtime rule has been uncertain under the Trump administration.
The proposed rule would rescind the 2016 rule that was struck down and create an entirely new rule. Important changes under the new rule include:
- Increasing the minimum salary level for an employee to qualify for exemption from federal overtime and minimum wage requirements to $679 per week ($35,308 annually);
- Increasing the total annual compensation for the “highly compensated employee” exemption from $100,000 under the 2004 rule to $147,414;
- Allowing employers to include certain nondiscretionary bonuses and incentive payments to count towards up to 10 percent of the salary level;
- A commitment to periodic review of the salary threshold (any update would require notice and comment rulemaking); and
- No changes to overtime protections for police officers, fire fighters, paramedics, nurses, laborers and non-management employees in maintenance, construction and similar occupations.
In addition, like the 2016 overtime rule, this rule would not alter the requirements related to an employee’s primary job duties for exemption under federal law
Upon publication in the Federal Register, which is expected to happen as soon as next week, the public will have 60 days to comment on the proposed rule. The DOL will consider these comments in developing a final rule, which is expected shortly before the 2020 Presidential election. Stay tuned.