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DOL Releases Proposed Update to Overtime Rules

Client Updates
On March 7, 2019, the Department of Labor (DOL) released its proposed revisions to the overtime regulations. In the proposed rules, in order to be exempt from the overtime eligibility, an employee must earn at least $679 per week (or $35,308 per year) as well as perform job duties that qualify the employee for one of the overtime exemptions.  This increased salary threshold is estimated to affect 1.1 million employees who are currently classified as exempt because they currently earn at least $455 per week ($23,660 per year), which was the threshold level set in 2004.

The proposed rule permits up to ten percent of the salary amount to be satisfied by the payment of commissions, incentives, and non-discretionary bonuses that are paid annually or more often. In addition, the new rule proposes to rescind the controversial 2016 rule, which called for a salary threshold of $913 per week ($47,476 per year), which was enjoined, then invalidated by a federal court almost immediately after it went into effect. 

One other effect of the proposed rule will be to increase the total annual compensation level of the highly compensated employee (HCE) test. Instead of $100,000 annually, HCEs will be required to earn $147,414. This change is anticipated to affect approximately 200,000 employees nationwide who are currently classified as exempt under the HCE test. 

Thursday’s announcement of the proposed rule is the first step in the process of adopting a new rule and updating the overtime regulations. The DOL is soliciting public comments for the next 60 days. The DOL’s web page on the new regulations is found here. Comments may be submitted here

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