DOL Announces Proposed New Overtime Rules

By Kristen A. Campbell

It’s been fifteen years since the salary threshold for overtime eligibility was last set, but on March 7, 2019 the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking to increase the minimum salary for certain “white-collar” administrative, professional, and executive employees to be classified as “exempt” salaried employees and, therefore, ineligible to receive overtime pay. The proposed new salary basis is $35,308/year ($679/week).  There were no proposals to the job duties test.

Under the current rule, in effect since 2004, the Fair Labor Standards Act (FLSA) provides that certain employees are exempt from the FLSA’s overtime pay requirements based on their job duties; provided that the employees are paid on a salary basis of not less than $23,660/year ($455/week). 

If enacted, the new overtime rule would reclassify an estimated 1.3 million workers currently exempt from federal overtime requirements and likely result in a pay increase for others over the new threshold.

The Proposed Rule does not require employers to take any action at this point. Instead, the Proposed Rule must follow the federal rulemaking process, including a 60-day period for public comment, followed by an additional period during which the DOL will review the comments and decide whether to make any changes. While this process unfolds, employers should consider the following steps:

*          Examine pay practices to identify whether any currently exempt employees might lose that status if the proposed salary thresholds are adopted;

*          Consider whether to increase the salaries of affected employees to preserve their exempt status and/or reclassify them as non-exempt; and

•          Examine pay practices to confirm that non-exempt employees continue to meet the duties test (which is not changing and remains essential to exempt status).