DOL ISSUES PROPOSED OVERTIME RULE; CONGRESS ATTEMPTS TO OVERRIDE IT
In 2016, the DOL under the Obama administration issued a rule requiring the salary basis to be raised to $913.00 per week ($47,476.00 per year), with an automatic increase every three years tied to cost of living increases. A lawsuit was filed and a Texas District court found the DOL exceeded its rulemaking authority, thereby invalidating the rule.
On March 7, 2019, the DOL under the Trump administration proposed a new rule which would increase the salary basis for the exemptions, but scale back the amount proposed under the Obama administration. The new proposed rule would increase the salary basis level to $679.00 per week ($35,308 annually). Eligibility for overtime above that salary amount would vary based upon job duties. The proposal also increases the total annual compensation requirement for “highly compensated employees” (HCE) from the current level of $100,000.00 to $147,414.00. The proposed rule includes periodic review for updating the salary threshold and allowing use of nondiscretionary bonuses and incentive payments to satisfy up to 10% of the standard salary level. The proposed rule does not make any changes to the job duties tests. The DOL has collected comments on the rule, but no implementation date has been set. For more information about the proposed rule, see https://www.dol.gov/whd/overtime2019/.
In an effort to override the DOL proposed rule, the House and Senate have introduced a bill called the Restoring Overtime Pay Act (H.R.3197). The law would set the salary threshold at a level equal to the 40th percentile of earnings of full-time salaried workers in the lowest-wage census region, as determined by the Bureau of Labor Statistics based on data from the second quarter of the calendar year preceding the calendar year in which such amount takes effect. If it were to take effect now, it would increase the salary basis level to approximately $51,000.00. It is not likely the Act will become law with the current Republican-controlled Senate and President Trump likely to back the DOL rule. A similar bill by the same name was introduced in 2017, but did not make it out of committee. For more information on the bill, see https://www.congress.gov/bill/116th-congress/house-bill/3197/cosponsors?s=1&r=135&overview=closed.
If you have questions about the proposed rule or legislation, or need assistance with wage and hour requirements, please feel free to contact Torrey Gerdes or Susan Foster.