DOL Proposes New Overtime Rule

March 12, 2019

The Department of Labor has published its proposal to replace the Obama administration’s vacated overtime rule. Under DOL’s new proposed rule, the minimum salary threshold required for workers to qualify for the Fair Labor Standards Act’s (FLSA) “white collar” exemptions would increase from $23,660 to $35,308 per year ($455 to $679 per week). According to DOL, its proposed rule will make an additional one million workers overtime-eligible.

The Obama administration tried to raise the FLSA threshold to $47,476, beginning in January 2017, but the rule was temporarily enjoined by a federal judge in Texas in November 2016, before he permanently invalidated it in August 2017. The Obama administration said at the time that its rule would cover about four million workers.

Under the new proposed rule, workers who make less than $35,308 per year will be automatically eligible for time-and-a-half pay for all hours worked beyond 40 in a week. In setting the new salary threshold, DOL said it applied the same methodology that was used to set the threshold in 2004.

DOL also proposed to review the salary threshold every four years, but any proposed increase would be subject to a notice-and-comment rulemaking. The 2016 Obama administration rule called for an automatic, regular threshold increase without an opportunity for a notice-and-comment period.

Under the proposed rule, employers will be able to use nondiscretionary bonuses or incentives, such as commissions, to satisfy up to 10 percent of the standard salary. The annual compensation requirement for “highly compensated employees” will also increase from $100,000 to $147,414 per year.

DOL declined to make any changes to the so-called “duties test,” the set of factors used to determine whether workers making more than the salary threshold are entitled to overtime wages. 

DOL said it is trying to finalize the rule so it can be effective on January 1, 2020.