On March 7, 2019, the U.S. Department of Labor (DOL) released its long awaited proposed rule to amend the current overtime regulations. Specifically, the proposed rule would raise the minimum salary threshold under the Fair Labor Standards Act (FLSA) "white collar" exemption to $35,308 per year ($679 per week). The proposal does not call for automatic adjustments to the salary threshold; however, it does propose updates to the salary threshold every four years.
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. Employees making at least this salary level may be eligible for overtime based on their job duties. This salary level was set in 2004.
To summarize, the proposed rule:
- Increases the minimum salary required for an employee to qualify for exemption from the currently-enforced level of $455 to $679 per week (equivalent to $35,308 per year).
- Increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $100,000 to $147,414 per year.
- Allows 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.
It's just the beginning. The public will now have 60 days to submit comments about the proposed rule electronically at www.regulations.gov. The DOL will take time to review submitted comments and an effective date for the final rule is not expected until 2020.
MRA will continue to monitor any updates to the FLSA exemption rules and provide updates as they become available, along with guidance and tools on how to implement solutions.
As always, MRA is here to assist you. Whether you are looking for additional resources or have questions, call our 24/7 HR Hotline at 866-HR-HOTLINE (866.474.6854) or email at email@example.com.