Department of Labor Announces Proposed Rule on Overtime Pay
On March 7, the Department of Labor (DOL) announced a proposed rule that would make more than a million more American workers eligible for overtime. Key provisions of the proposal include:
Salary Threshold – Raises the threshold to $35,308/year ($679/week) by reverting to the methodology used in the 2004 rule that focused on the 20th percentile of full time wage earners in the lowest income region of the company (identified as the South) as well as the retail industry.
Future Salary Updates – Does not implement automatic updates, but the proposal seeks comment on conducting regularly scheduled rulemakings to update the salary threshold consistent with the methodology used in this proposal.
Duties Test – Makes no changes to the duties tests.
Highly Compensated Employees – Increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $100,000 to $147,414 per year which is higher than the Obama DOL reg’s threshold of $134,004. The DOL maintained the methodology used by the Obama administration for this salary level which resulted in the higher threshold.
Salary Test – Would allow nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10 percent of the standard salary test requirement.