Proposed Overtime Regulations - Take 2

The Department of Labor issued its much anticipated proposed overtime regulations yesterday, after about a year and a half of anticipation from employers and workers alike.

Yesterday the Department announced its proposed rule to increase the threshold salary for exempt status eligibility from $455 per week ($23,660 annually), set in 2004, to $679 per week (equivalent to $35,308 per year).

As employers are aware, the so called “white collar exemptions” for overtime provides that executive, professional and administrative employees are exempt from overtime provisions if they meet a two-part test. The first part is often referred to as the salary basis test, which requires that employees are paid on a salary basis at a minimum threshold. It is the salary threshold that the DOL proposes to increase. The second part of the white-collar exemption test is that eligible employees’ primary duties meet the DOL’s definition of exempt in at least one of the three categories of professional, executive or administrative. The proposed rule does not change the job duties test.

Other proposed changes to the rule include the following:

• The proposal increases 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 non-discretionary 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
• Paramedics
• Nurses
• 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

Unlike the first, Obama era, white collar overtime rule change issued in 2016, which was struck down by a Texas court and eventually withdrawn by the Department, this proposed rule contains no automatic adjustments to the salary threshold.

The Department will consider all timely comments in developing a final rule. The public will have 60 days to comment on the proposed regulation. The comment period will begin on the date of publication in the Federal Register.