On March 7, 2019, the U.S. Department of Labor (DOL) finally issued proposed overtime rules as a result of extensive public input. Currently, employees with a salary below $23,660 ($455 per week) must be paid overtime if they work more than 40 hours per week. Workers making at least this salary level may be eligible for overtime based on their job duties. This salary level was set in 2004.
The new proposal would update the salary threshold from $455 to $679 per week ($35,308 per year) starting January 1, 2020, with the intent to increase the thresholds every four years. It would also raise the annual compensation required to qualify for a “highly compensated employee” exemption from $100,000 to $147,414. Finally, there are special salary tests included for U.S. territories and the motion picture industry.
The DOL’s first attempt to raise salary levels, which would have more than doubled the pay required for most overtime exemptions to $47,476 a year ($913 a week), was stopped by a Texas federal court soon before its effective date in December, 2016. At that time, the DOL decided to reevaluate the rules and conducted a number of public listening sessions, resulting in this latest proposal.
Based on current data, the DOL estimates that 1.3 million workers will be affected by the salary level threshold and HCE total compensation level increases.
Please contact your Sisterson representative for help in preparing your business for the new overtime rules.