On March 7, 2019, the Department of Labor (DOL) announced a proposed rule to raise salary requirements for overtime exemptions for executive, administrative, and professional employees. Currently, the salary threshold for exempt employees is $455 per week, or $23,660 annually. Under the Fair Labor Standards Act (FLSA), employees below this salary threshold must be paid overtime for hours worked in excess of 40 hours per week.
Under the proposed rule, the salary threshold for the overtime exemption would raise to $679 per week, or $35,308 annually. In order to classify employees as exempt from overtime requirements, employers would need to meet this new requirement, in addition to the job duty requirements. This salary proposal is approximately $12,000 lower than the DOL’s proposed change in 2016.
The proposal also increases the total annual compensation for exempt “highly compensated employees” from the current annual salary of $100,000 to $147,414.
The DOL submitted the proposed rule to the Office of the Federal Register for public comment. If accepted, the DOL estimates that the new rule will take effect in January 2020.
More information regarding the proposed rule is available at https://www.dol.gov/whd/overtime2019/. In addition, the public is encouraged to submit comments about the proposal at https://www.regulations.gov/, in the rulemaking docket RIN 1235-AA20. The public has 60 days to comment on the proposed rule, beginning on the date of publication.
Takeaway: Employers may soon have to comply with new salary requirements for FLSA overtime exemptions. It is never too early to review current overtime policies and employee classifications to identify changes that may be needed when the proposed rule goes into effect.
