On March 7, 2019, the U.S. Department of Labor (DOL) announced a long-awaited proposed rule that would increase the salary level at which exempt employees under the Fair Labor Standards Act (FLSA) must be paid in order for employers to deny overtime pay.
Currently, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. Workers making at least this salary level may be eligible for overtime based on their job duties. This salary level was set in 2004.
The proposed rule would boost the proposed standard salary level to $679 per week (equivalent to $35,308 per year). Above this salary level, eligibility for overtime varies based on job duties. This amount accounts for wage growth since the 2004 rulemaking, projected forward to January 1, 2020, the approximate date a final rule is anticipated to be effective.
In addition to the increase in the salary level, the rule proposes the following:
- An increase in the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $100,000 to $147,414 per year.
- A commitment to periodic review to update the salary threshold. An update would continue to require notice-and-comment rulemaking.
- Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level.
- No changes to overtime protections for:
- Police Officers
- Fire Fighters
- Laborers including non-management production-line employees
- Non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers
- No changes to the job duties test.
- No automatic adjustments to the salary threshold.
Note that this is only proposed. The DOL needs to consider all timely comments before developing a final rule. Any changes would not take effect until after publication of a final rule. To submit comments electronically, go to the Federal eRulemaking Portal, in the rulemaking docket RIN 1235-AA20. Comments will be accepted for 60 days.