New Proposed DOL Rule Would Make More Employees Eligible for Overtime

March 22, 2019

By: Kimberly Klein and Shari A. Alexander

Once again the U.S. Department of Labor (“DOL”) is proposing regulations that would require employers to pay overtime to more of their workforce by raising the current salary requirement for workers to be classified exempt from overtime.  In 2016, a federal court enjoined the DOL’s last attempt to change the exemption requirements. Click here for the article. If the new rule becomes effective, the DOL estimates that roughly 1.3 million more workers will become eligible for overtime pay. 

The Notice of Proposed Rulemaking was published March 22, 2019, and the comment period will run through May 21, 2019.  The DOL is projecting that the final rule could become effective on or about January 1, 2020. 

Under the proposed rule, the minimum salary requirement to exempt executive, administrative and professional employees from overtime pay – also referred to as the white-collar exemptions – would increase from $455 per week or $23,660 per year to $679 per week or $35,308 per year.  If passed, any employee currently classified as exempt, and who is being paid between $23,660 and $35,308, would need to be reclassified as non-exempt, eligible to receive overtime. 

In addition, the proposed regulations would increase the threshold for the “highly-compensated” exemption from $100,000 to $147,414 in total annual compensation.  Thus, employers would also be required to reevaluate employees who are paid between $100,000 and $147,413 in annual compensation to determine whether they are still exempt from overtime requirements. 

Employers in New York will be less affected because the State’s minimal salary thresholds already exceed those under the proposed federal regulations. Click here to read Employment Laws NY Employers Need to Know in 2019.

The rule maintains overtime protections for police officers, fire fighters, paramedics, nurses and laborers, including non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen and construction workers.  Increased salaries for these professions will not make these workers exempt from overtime.

If approved, this will be the first change to the salary and compensation thresholds for exempt workers since 2004.