U.S. Department of Labor Proposed Expanding Overtime Eligibility to Over 1 Million Workers

Legal Alert

March 8, 2019

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The U.S. Department of Labor (DOL) proposed updates and revisions to the regulations issued under the Fair Labor Standards Act (FLSA) on Thursday that would expand overtime eligibility to more than one million American workers.

Currently, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. This salary level for the FLSA’s “white collar” exemptions was set in 2004, and according to the DOL, an update is needed.

Under the proposed rule, which the DOL currently anticipates becoming effective in January 2020, the salary threshold for white collar exemptions would rise to $679 per week ($35,308 annually). In coming up with this salary level, the DOL sought public input from sessions held across the country, as well as comments from a 2017 Request for Information. The proposed rule also increases the total annual compensation requirement for “highly compensated employees” from the current level of $100,000 to $147,417 per year.

Though higher than the current threshold of $23,660 annually, the proposed threshold is still well below the $47,476 threshold that the DOL enacted in 2016. That regulation was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and the U.S. Court of Appeals for the Fifth Circuit has held an appeal in abeyance pending further rulemaking regarding a revised salary threshold.

The proposal maintains overtime protections for police officers, firefighters, paramedics, nurses, and laborers. The proposal also allows 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. Unlike the 2016 rule, that set a formula for the overtime threshold to rise automatically with inflation, this proposal does not require automatic adjustments to the salary threshold. Instead, this proposal merely directs the DOL to update the salary threshold at its discretion every four years. Finally, the proposed rule does not make any changes to the job duties test for exemptions.

The proposed rule will be published in the Federal Register, and, once published, the public will have 60 days to submit comments about the proposed rule. The DOL will consider all timely comments in developing a final rule.

If you have any questions regarding the Department of Labor’s proposal, please contact your labor and employment counsel at Smith, Gambrell & Russell, LLP.