More employees may no longer be exempt from overtime if the rules proposed by the Department of Labor in March of 2019 become finalized. As discussed in our blog back in February, Secretary of Labor, Alexander Acosta, has indicated that the administration does support an increase in the salary limits. These limits have been only updated twice in the last 43 years and not at all since 2004.

The Obama administration attempted to raise the minimum salary for exemption from $23,600 to almost $48,000 per year. This was put on hold after a federal court in Texas invalidated this rule nationwide. The new proposed overtime rule takes a more modest approach and increases the threshold to $35,308 per year. This is still a significant increase and employers should begin to prepare for this change soon.

In addition, this rule includes 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 rule-making.
  • 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 in 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 other construction workers.
  • No changes to the job duties test.
  • No automatic adjustments to the salary threshold.

The comment period for this closed May 21, 2019 and there haven’t been any more recent updates from the DOL at this time. Integrity Data will continue to keep an eye on this and other payroll and HR compliance issues that may impact your business.

Written by Tom Franz, Client Services Director - Integrity Data