U.S. Department Of Labor Proposes To Expand Availability Of Overtime Pay
On August 30, the U.S. Department of Labor (DOL) proposed a new regulation that would expand the number of workers eligible for overtime pay. Specifically, if implemented, the new rule would guarantee overtime pay to most salaried workers who earn less than $1,059 per week, or about $55,000 per year.
The DOL said the announcement followed months of outreach to employers, workers, unions, and other stakeholders and 27 listening sessions with more than 2,000 participants.
To qualify under current law for the white-collar overtime pay exemption, an employee must meet each one of three tests: the salary-basis test, which says an must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; the salary-level test, which says the amount of salary paid must meet a minimum specified amount; and the duties-test, which says the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations.
The DOL proposed rule alters the thresholds for some of these tests in several meaningful ways.
Specifically, if implemented, the new regulation would:
- Increase the standard salary level from $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year);
- Boost the total annual compensation requirement for highly compensated employees from $107,432 per year to $143,988 per year;
- Restore overtime protections for U.S. territories; and
- Automatically update earnings thresholds every three years so they keep pace with changes in worker salaries.
The DOL will take public comments on the proposal for the next 60 days.
Lawyers at Clark Hill advised that “employers should begin reviewing their practices now to determine whether changes would need to be made to comply with the new rule and consult with their counsel regarding how best to implement those changes if and when the rule is finalized.”
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