Deja vu – New Overtime Rules In the Making

by | Mar 17, 2019 | Employment Policies, Legal Risk, Wage and Hour

Well…as expected…it’s happening again.

On March 7, 2019, the US DOL submitted a new proposed overtime rule to the Office of the Federal Register for publication that will…again…seek to increase the salary basis for certain exempt positions.  

Here’s a brief chronology to refresh your memory:

  • Current US DOL regulations regarding certain white collar exemptions under the Fair Labor Standards Act (FLSA)(i.e. executive, professional, administrative and highly compensated employees) provide that the employee must be paid a base salary of $455.00 per week (or $23,660 per year). Importantly, to meet the exemption, the employee’s position must also meet the duties requirements as well.
  • Mid-2016, the DOL issued new regulations indicating that for certain employees to be considered exempt from overtime and minimum wage requirements under the FLSA, the employee had to be paid a regular salary of $913.00 per week (or $47,476 per year). Importantly, no changes were proposed to the duties requirements as well.
  • Late-2016 / Early 2017, several businesses and other organizations filed lawsuits to stop the DOL’s regulation from taking effect and succeeded in doing so in late 2017.

So, what’s happening now?

March 7, 2019, The US DOL announced a new proposed overtime rule that the DOL feels would make more than 1,000,000 workers eligible for overtime. Here are the details.

The proposed rule would:

  • Increase the salary basis to $679.00 per week (or $35,308 per year);
  • For highly compensated employees, the current required compensation would increase from $100,000 per year to $147,414 per year;
  • Require a commitment to periodically review the salary threshold;
  • Allow employers to use non-discretionary bonuses and incentive payments (including commissions) paid annually (or more frequently) to satisfy up to 10% of the salary basis;
  • Not change the required duties tests for the impacted exemptions.

What are the next steps?

  • The DOL has submitted the proposed rule to the Office of the Federal Register for publication.
  • Once the rule is published, employers will have 60 days to comment.
  • Stay tuned!