On March 7, the Department of Labor issued a proposed ruling making overtime pay mandatory for workers earning less than $35,308 per year. This ruling ensures eligible employees earn time-and-a-half pay for hours exceeding a 40-hour workweek. Currently, the salary threshold for overtime sits at $23,660, which was last adjusted in 2004. The current salary threshold will be enforced until the current proposal has been finalized.
The newly proposed threshold is lower than the Obama-era overtime proposal, which required all employees with annual salaries below $47,000 receive overtime compensation. Before the ruling could take effect, a federal judge sidelined the effort, citing administrative overreach by the Department of Labor. Shortly after, the Trump administration took office announcing it would issue a request for public comment, effectively restarting the review process.
The previous proposal also included a periodic salary threshold increase every three years. At this time, automatic adjustments are not included in the new proposal, however, there is a commitment to review the salary threshold periodically. There were also no changes to the duties test, which is an important factor in determining eligibility for an executive, professional, administrative, computer and outside sales exemption from overtime.
Public comment on the proposed rule remains open until May 21, 2019.
Overtime pay lawsuits are unfortunately common and costly for businesses, making it important for employers to monitor overtime rule changes and act accordingly. If you have questions about how this proposed ruling may affect your business, please contact Randy Woehl, director of HR consulting services at 913.345.0440.
