The U.S. Department of Labor (DOL) recently announced it plans to propose a new overtime rule in March 2019. The rule aims to update the Fair Labor Standards Act (FLSA) regulations that set salary requirements for determining when an employee must be paid overtime. Today the threshold remains at $23,660. Previously, the Obama administration attempted to raise the threshold to $47,476. However, that rule was struck down by a federal judge in 2016.
The new rule comes as the Trump administration continues to focus on freeing businesses from burdensome regulations and taxes. The overtime rule will be one of the few moves increasing regulatory responsibility for employers, as it will most likely expand the number of workers who must be paid overtime for all hours worked in a week beyond 40 hours.
What employers should expect in the new overtime rule
Although it’s uncertain where the DOL will set the new threshold, a level between $32,000 and $35,000 is expected. This would be consistent with the Secretary of Labor’s comments on the issue and is considerably lower than the Obama-era proposal. This would also be significantly lower than the minimum salary exemption for several states.
Another possibility is the DOL will depart from its one-size-fits-all salary minimum and propose different tests for smaller employers or non-profit organizations. Small businesses, non-profits and educational institutions would be among the hardest hit by any increase in the minimum salary levels and were among the loudest voices in opposition to the 2016 overtime rule changes.
If the DOL sticks to its March 2019 timeline, they will likely have to review hundreds of thousands of public comments before moving forward with a final rule. The DOL received more than 270,000 comments in response to the Obama administration’s proposed rule. Although employers still have ample time to plan and prepare for any increases in the minimum salary for exemption, it’s still important to understand the implications of any potential regulatory changes.
For more information, please contact your Bukaty benefits consultant at 913.345.0440.