Coming Soon: Change in Overtime Salary Rules

Coming Soon: Change in Overtime Salary Rules

Here is a quick update on the overtime rules newly proposed by the United States Department of Labor.

The notice of proposed rulemaking on overtime requirements (which is the first step of the Labor Department’s regulatory process) has been issued. Under the current enforced law dealing with overtime, employees with a salary under $455 per week (or $23,660 annually) must be paid overtime if they work more than 40 hours a week. The Department of Labor proposed that the threshold should increase to $679 per week (or $35,308 per year). Salary level is only one of the factors to consider when determining whether an employee must be paid overtime. Simply because an employee will make more than $679 per week does not mean they are exempt from overtime rules.

The Department of Labor is now seeking public comment. They are going to be holding public listening sessions around the country (locations not yet confirmed). You can also comment directly with the Department of Labor through their online commenting tool.

The proposed rule would increase the minimum salary level to $679 per week. It changes total compensation for certain highly compensated employees. The Department of Labor plans to do a periodic review of the salary threshold. The last time the salary threshold was evaluated was in 2004, meaning that fifteen years has gone by since the last change (and that is a long time). 

The Department of Labor will be looking at ways to consider how to handle things like non-discretionary bonuses and incentive payments, and also looking at some other information that might be of use in trying to figure out how to be more consistent in their periodic review of the salary rule.

Unlike the Obama rule of a few years ago, this new rule will not have an automatic adjustment to the salary threshold. Under Obama, the Department of Labor had tried to do an automatic update using the consumer price index or other inflation measurements and the court in Texas declared that in violation of Congress’ clear intent which requires a periodic review. 

The next steps will be the public comment period, and from there the Department of Labor hmust review the rules and then issue the final rule. It is anticipated that the final rule would be released in the summer of 2020 with likely implementation beginning January 1, 2021. The Department of Labor has indicated that they want to have this done before the 2020 election. 

For more information, you can check out this link on the Department of Labor website.

If you have any questions about the proposed rulemaking or what it means for your employees in your business, please give us a call. We can talk about further steps you can take to get ready.