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.
ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm of approximately 725 lawyers practicing throughout a network of 13 offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy and technology sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.