DOL Proposes New Overtime Rule

On March 7, 2019, the U.S. Department of Labor (DOL) proposed a new rule to increase the minimum salary for exempt employees to $679 per week (equal to $35,308 annually). The current minimum salary is $455 per week (or $23,660 annually). The proposed rule does not take effect immediately and will be subject to a 60-day comment period. The DOL will publish its final rule after the comment period has closed and the comments have been reviewed. If the rule takes effect, the minimum salary increase is estimated to impact 1.1 million workers.

 

The DOL administers the federal Fair Labor Standards Act (FLSA) entitling employees to overtime after working in excess of 40 hours per week. The overtime requirement, however, has many “exemptions.” Employees who qualify for an exemption must be paid the minimum salary, which the DOL sets by regulation and is now proposing to increase.

 

The last increase to the minimum salary was in 2004. However, a recent attempt to increase the minimum salary to $913 per week (equal to $47,476 annually) was unsuccessful. That increase was proposed in June 2015, had been published by final rule in May 2016, and was set to take effect on December 1, 2016, but the rule was subject to legal challenge and never went into operation.  

 

If the current rulemaking process follows a similar timeline, the final version of the latest proposed rule should be published in early 2020 with an effective date before the end of next year. Reporting also suggests the DOL will be moving to finalize the proposed rule by 2020 because it is an election year.

 

Under the current proposed rule, the minimum salary will be reviewed every four years and subject to increase at the DOL’s discretion through the normal rulemaking process. By contrast, the rule proposed in June 2015 included a formula to increase the minimum salary automatically with inflation, which was a significant point of contention that the latest proposed rule does not follow.

   

In addition to the minimum salary, whether an employee qualifies for exemption also depends on the employee’s primary duties. The proposed rule, however, does not include any changes to the primary duty test.  

 

Sturgill Turner will continue to monitor the rulemaking process and update you as progresses. Please contact us if you have any questions or concerns regarding the proposed rule and its potential impact.