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Department of Labor Proposes New Law for Overtime Pay

On March 7, 2019, the United States Department of Labor (“DOL”) announced a Notice of Proposed Rulemaking (“NPRM”) that would entitle an additional 1.3 million American workers to overtime pay. Under the current law, employees with a salary below $23,660 annually ($455 per week) must be paid overtime if they work more than 40 hours in a given week. The NPRM proposes that the salary threshold be increased to $35,308 annually ($679 per week). The NPRM also increases the total annual compensation requirement for “highly compensated employees” from $100,000 to $147,414. The NPRM proposes that employers may count nondiscretionary bonuses and incentive payments (e.g. commissions) to satisfy up to ten percent of the standard salary level as long as these bonuses and incentive payments are paid annually or on a more frequent basis. In proposing these changes, the DOL used current wage data projected to January 1, 2020. Since the current salary level was set in 2004, this NPRM proposes that earnings thresholds be updated every four years through further rulemaking.

The Fair Labor Standards Act (“FLSA”) exempts from its minimum wage and overtime requirements certain employees who meet these thresholds and perform certain duties. Qualifying duties are set forth in the executive, administrative or professional exemptions. The NPRM is not proposing any changes to this standard duties test. The NPRM also keeps in place its overtime protections for police officers, fire fighters, paramedics, nurses, laborers (including non-management production-line employees), and non-management employees in maintenance, construction and similar occupations (e.g. carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen and construction workers).

Comments to this proposed rule may be submitted electronically at www.regulations.gov in the rulemaking docket RIN 1235-AA20. Once the rule is published in the Federal Register, the public will have 60 days to submit comments. The DOL will consider all comments in developing a final rule. Burns White will continue to monitor and report on this rule, including any legal challenges which may be brought.