Labor & Employment Developments Blog

On March 7^th, the Department of Labor revealed its proposal to revise the overtime requirements for workers across the country. The salary threshold at which employees can be eligible for overtime pay was last increased in 2004 during the George W. Bush Administration and set at the current level of $24,000 per year. In May of 2016, the Department of Labor under the Barack Obama Administration issued its own revisions to the overtime requirement, raising the salary threshold to $47,476 per year. These revisions were set to go into effect December 1, 2016, but Court challenges immediately followed and the changes were never implemented.

The new proposal just announced by the Department of Labor would, among other changes, raise the salary threshold for overtime eligibility to $679 per week, or $35,308 per year, striking a balance between the current level and the proposed 2016 level. It further proposes an update to the “highly-compensated” employee salary level to $147,414 per year, up from the current level of $100,000. The proposal does not suggest any changes to any of the current “duties tests” to determine whether an individual employee qualifies for any of the exemptions to the overtime requirements. It does however, request recommendations from the public on whether and how the overtime requirements might be periodically updated in the future. The Department estimates an additional 1.1 million workers will become eligible for overtime compensation, as opposed to the 4.2 million who would have become eligible under the 2016 proposal. 

The public will have 60 days from the date the proposal is published in the Federal Register to submit comments, at which point the Department of Labor will review the comments before publishing a final rule. The Department of Labor has identified January 2020 as its target for issuing the final rule. Once the final rule is announced, a court challenge is likely from workers groups arguing for a greater increase in the salary threshold. Anticipating such a challenge, the Department of Labor has highlighted that its proposal follows the same economic methodology used to reach the existing standard. 

This proposal represents a significant change to the long-static rules regarding overtime pay, and employers should be aware changes to these rules are on the horizon. Stay tuned to this blog for further developments, and contact a KMK attorney with any questions you may have regarding how this proposal may impact your business.