On March 7, 2019, the U.S. Department of Labor issued a Notice of Proposed Rulemaking regarding overtime pay. Specifically, the proposal would increase the salary threshold for many exempt employees from $455 per week to $679 ($35,308 annually), thus making millions of workers eligible for overtime pay. The rule is not final—only proposed. A final rule is generally expected in late 2019 or early 2020, and, like the Obama-era rule change that was blocked in November 2016 by a federal judge in Texas, it is likely that this new rule will also be challenged, which will result in additional delays and confusion.
The proposal would revise the salary thresholds for the executive, administrative and professional exemptions from the overtime requirements to an annual salary of $35,308. Additionally, it:
- Increases the “highly compensated employees’” salary level from $100,000 to $141,414 per year;
- Includes a commitment to periodic review to update the salary threshold; and
- Allows the ability to use nondiscretionary bonuses and incentive payments to satisfy up to 10 percent of the salary level.
The proposed rule does not include any changes to the job duties test.
While Warren Averett advises against making any changes to your compensation structures and pay practices at this time, employers may want to review the proposed rule and start evaluating how such a change may impact their business and workforce.
Once the proposed rule has been formally published in the Federal Register, the public, including employers, will have 60 days to submit public comments. We expect the rule to be published any day now. To submit a comment, please visit the online portal by clicking here and entering Regulatory Information Number (RIN) 1235-AA20.
To access the DOL’s information page on the proposed rule, please click here.
Please watch for additional information and resources regarding this subject as more information becomes available.