Labor & Employment News Alert
Notice of Proposed Rulemaking: DOL Proposes Overtime Pay Expansion
March 7, 2019
After months of speculation, the U.S. Department of Labor (DOL) unveiled new overtime pay requirements on Thursday, March 7, 2019. The new proposal would raise the new salary threshold for white collar overtime exemptions will move to $35,308 per year under the Fair Labor Standards Act.
Workers who earn less than $35,308 per year (or $679 per week) would be automatically eligible for overtime pay (time-and-a-half) for all hours worked in excess of forty (40) hours in a week. The current threshold is $24,000 per year ($455 per week), which represents the last increase which occurred in 2004. Notably, the proposal is not as high as the Obama Administration’s proposal, which would have raised the mark to approximately $47,000 per year, but that proposal stalled before it could be adopted.
The DOL has further considerations in the proposed rule which differ from its predecessors. For example, the Obama Administration’s proposal contained automatic, periodic increases of the salary threshold until the requirement reached the $47,000 mark. This proposal, however, asks the public for ideas on whether or how the DOL can update the overtime requirements every four years. Moreover, the proposal does not affect the “duties test,” which is a checklist of whether workers making more than the threshold are supervisors, who would not be entitled to overtime pay.
This new proposal would significantly expand the number of workers eligible for overtime pay. DOL figures estimate that more than one million additional workers would be eligible for overtime pay, should the proposal survive the rule-making process and legal challenges. The most likely challengers are business groups concerned about rising employer costs and worker advocates who would argue that the rule does not go far enough. For reference, the Obama Administration proposal was blocked by a judge in 2017, and the Trump administration has since dropped its defense on appeal. Another development to watch closely with the proposed rule is legislation in Congress to restore the blocked Obama overtime proposal. For now, the DOL is in a “race against the clock” to get a rule finalized before the 2020 election, which would make it more difficult to change the rule if there is a change in the White House.
As with all DOL proposed rules, the Department is seeking public comments. The rule will be open for a 60-day comment period. While the documents are not yet available on the Federal Register website, the public can visit www.regulations.gov and search for docket number RIN 1235-AA20 and leave comments, once published.