DOL Proposes Expanded Overtime Rule
Overtime eligibility for more than 1 million workers across the United States would be expanded under a March 7, 2019 proposed rule issued by the Wage and Hour Division of the Department of Labor (“DOL”).
Since 2004, employers must pay overtime to salaried employees who receive less than $455 per week ($23,660 annually) for any time spent working over the traditional 40-hour work week. Other workers with higher salaries may be also be eligible for or excluded from overtime depending upon their specific job duties. For example, “highly compensated employees” have a total annual compensation requirement of $100,000 per year.
The DOL attempted to increase the salary threshold in May 2016 and to enact an automatic update provision that would increase that threshold every three years. The change was quickly enjoined by the U.S. District Court for the Eastern District of Texas. Since then, an appeal at the U.S. Court of Appeals for the Fifth Circuit has been held in abeyance as the Department of Labor engaged in further rulemaking on the issue while continuing to enforce the 2004 rule.
Under the proposed rule, the salary threshold would be increased to $679 per week ($35,308 per year). Other workers with high salaries may still be eligible for or excluded from overtime depending upon their specific job duties. For example, the new rule would increase the total annual compensation requirement for “highly compensated employees” to $147,414 per year. Additionally, the new rule would enact special salary levels for employees in the motion picture industry and varying levels for employees in various United States territories.
The proposed rule would not change the job duties test. Nor would it make any changes to the overtime protections for police officers; firefighters; paramedics; nurses; laborers including non-management production-line employees; and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and other construction workers.
The proposed rule would not enact automatic adjustments to the salary threshold. Instead, the Wage and Hour Division would make a commitment to periodically review and update the salary threshold after the required notice-and-comment rulemaking process. Additionally, employers will be allowed to use nondiscretionary bonuses and other annual or more frequent incentive payments (such as commissions) to satisfy up to 10 percent of the standard salary level.
“Our economy has more job openings than job seekers and more Americans are joining the labor force,” said Secretary Alexander Acosta. “At my confirmation hearings, I committed to an update of the 2004 overtime threshold, and today’s proposal would bring common sense, consistency, and higher wages to working Americans.”
The Wage and Hour Division held six in-person listening sessions across the nation and received more than 200,000 comments as part of a 2017 Request for Information (RFI) from the public while developing the proposal. Participants in both the in-person listening sessions and RFI overwhelmingly agreed that the overtime salary threshold needed to be increased.
The public comment period will close on May 21, 2019 after remaining open for 60 days.
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