The U.S. Department of Labor (DOL) has released an updated proposal regarding overtime rules set under the federal Fair Labor Standards Act (FLSA). Under the FLSA, all employees – unless they’re exempt – must receive overtime pay for working more than 40 hours in a single workweek. To be exempt, an employee’s job duties and salary must meet certain requirements. Presently, the salary test requires workers to earn at least $23,660 annually to be exempt from overtime.
In 2014, President Obama directed the Secretary of Labor to update these regulations. By May 2016, with feedback from more than 250,000 public comments, the DOL issued a rule that raised the salary test threshold to $47,476 annually. However, the rule was held by injunction in the U.S. court system.
The DOL under the Trump administration delayed its response to the injunction and entered into two public comment periods, a request for information in 2017 and listening sessions in 2018. Now, the DOL wants to rescind the 2016 final rule and is proposing a replacement with these requirements:
- Raise the salary threshold from $455 per week ($23,660 per year) to $679 per week ($35,308 per year);
- Allow employers to include “certain nondiscretionary bonuses and incentive payments” to account for up to 10% of the new $679 per week salary threshold; and
- Raise the total annual compensation requirement for highly compensated employees from $100,000 to $147,414.
The Society for Human Resource Management has come out in support of this latest proposed salary threshold. Employers with salaried employees making below $35,308 annually should closely monitor any developments. If accepted, the new proposal could take effect in 2020.