DOL Publishes Overtime Rule
March 14, 2019
On March 7,
the much anticipated overtime
rule was released. The U.S. Department of Labor (DOL) has proposed to
increase the salary threshold for overtime eligibility under the Fair Labor
Standards Act (FLSA) to $35,308 a year ($455 to $679 per week). The proposal
does not include automatic adjustments — an option previously under consideration.
It is expected to be published in the Federal Register as early as this
raises the salary threshold to $35,308 per year ($679/week) by reverting to the
methodology used in the 2004 rule that focused on the 20th
percentile of full time wage earners in the lowest income region of the company
(identified as the South) as well as the retail industry. The rule does not
implement automatic updates, but the proposal seeks comment on conducting
regularly scheduled rulemakings to update the salary threshold consistent with
the methodology used in this proposal. Additionally, it does not make any
changes to the duties test.
rule would allow employers to include “certain nondiscretionary bonuses
and incentive payments (including commissions)” as up to 10 percent of the
new $679 per week salary threshold, and would also increase the total annual
compensation requirement for highly compensated employees (HCE) from the
current $100,000 per year level to $147,414 per year, which is higher than the
Obama DOL regulations threshold of $134,004. The DOL maintained the methodology used by the
Obama administration for this salary level which resulted in the higher
threshold. The DOL also said it intends to propose updates to earnings
thresholds at a rate of every four years.
announcement follows months of speculation in the employment community about an
update to overtime requirements, as well as an ill-fated effort by the Obama
administration to set an even higher salary threshold of $47,476.
In 2016, a
federal judge enjoined the Obama administration’s overtime rule. The appeals
process bled into the change in administrations, until the Trump
administration’s DOL dropped its defense of the Obama-era rule. But the agency
simultaneously asked the 5th U.S. Circuit Court of Appeals to approve the use
of a lower threshold because the federal judge who issued the injunction had
questioned the legality of any salary threshold whatsoever in his decision.
threshold, up from the current $23,660, would expand overtime eligibility to
more than a million additional U.S. workers, according to the DOL announcement. Once
published in the Federal Register, DOL’s
of Proposed Rulemaking (NPRM) will be subject to a 60-day public comment
information on the proposal is available below: