U.S. Department of Labor Releases Highly Anticipated Proposed Changes to the Overtime Rules
On March 7, 2019, the Department of Labor ("DOL") released the highly anticipated proposed changes to the overtime rules. Under the current rules, workers who earn less than $23,660 must be paid overtime compensation. This threshold was set in 2004. The new rule would require workers who are under the salary threshold of $35,308 to be paid overtime for hours over 40 per week. President Obama's administration previously proposed a threshold of $47,476. However, that proposal was blocked by a legal challenge in 2016 and remains pending in the appellate court. It is important to note that in order to be exempt from overtime compensation, employees must meet both the salary basis test and the job duties test. Therefore, salary is not the only consideration.
The DOL also proposes: (i) increases the total annual compensation requirement for “highly compensated employees” from $100,000 to $147,414 per year; (ii) allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level; (iii) no changes for specific positions covered under the regulations; and (iv) no changes to the job duties test.
This is not an automatic increase. Rather, the DOL is asking for public comment on the proposal. After publication in the Federal Register, the proposal will be open for a 60-day comment period. It is expected that this change would expand overtime rights to one million additional workers.