Proposed New Overtime Salary Threshold
For the first time since 2004, the Department of Labor (DOL) announced a Notice of Proposed Rulemaking (NPRM) that would change the current salary threshold to receive overtime. 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. Under the NPRM, the threshold would increase from $455 per week to $679 per week ($35,308 annually).
Alexander Acosta, United States Secretary of Labor, stated he committed to the increase in the overtime threshold because the “proposal would bring common sense, consistency, and higher wages to working Americans.” A 2017 Request for Information on the salary threshold drew overwhelming support to update the threshold. As a result, the NPRM proposes to review the salary threshold every four years.
In addition to the salary threshold increase, 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. An employee who fits the HCE criteria qualifies for exemption from the Fair Labor Standards Act’s minimum wage and overtime pay requirements.
Lastly, the NPRM proposes allowing employers to use certain nondiscretionary bonuses and commissions that are paid annually, or more frequently, to satisfy up to 10% of the standard salary level.
The Department of Labor announced the NPRM was open for public comment on March 22, 2019, continuing until May 21, 2019. The Department encourages any individual interested in the proposal to submit comments about the proposed rule electronically at regulations.gov.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.