News & Insights

Department Of Labor Discloses Proposed Updated Overtime Rules

The United States Department of Labor (“DOL”) issued a long-awaited proposed overtime rule and new exemption threshold under the Fair Labor Standards Acts (“FLSA”) on March 7, 2019.  The proposed rule raises the salary threshold for overtime eligibility from $23,660.00 to $35,308.00, or $679.00 per week.  As such, employees earning under $35,308.00 a year must be paid overtime for hours worked in excess of 40 each week.  Above this salary level, eligibility for overtime varies based on job duties. 

For highly compensated employees, the DOL raised the salary threshold from $100,000.00 to $147,414.00.  To help offset the increased salary threshold, the proposed rule allows employers to use nondiscretionary bonuses and incentive payments, including commissions, which are paid annually to satisfy up to 10% of the standard salary level. 

Importantly, the proposed rule does not make any changes to the FLSA’s job duties test that determines whether an employee is exempt.  Additionally, there are no changes in overtime protections for police officers, fire fighters, paramedics, nurses, non-management production line employees and non-management employees in maintenance, construction and other similar occupations.

The DOL estimates the proposed rule will impact approximately 1.1 million workers.  The proposed rule is expected to take effect in January 2020, after a 60-day public comment period.

Employers will need to review salaries and job classifications in light of the proposed rule.  Employers may need to raise salaries to maintain exemptions.  Another option is to continue paying current salaries, but include payment for overtime hours worked in a given week.  Employers may also reorganize workloads or adjust schedules to eliminate overtime hours.  Employers should consider seeking guidance from counsel on review of their current policies and practices.