On March 7, 2019, the U.S. Department of Labor (“DOL”) announced a Notice of Proposed Rulemaking (“NPRM”) that proposes a new rule regarding overtime pay. Currently, employees who make less than $455 per week must be paid overtime for all hours worked over 40 per week. Employee who make $455 per week or more may be paid overtime for all hours worked over 40 per week based on their job duties.
However, under the new proposed rule, the standard salary level will increase to $679 per week. In doing so, employees who make less than $679 per week will be required to receive overtime pay for all hours worked over 40 in a workweek. The impact of this proposed rule is significant as it would allow more than a million more American workers to receive overtime pay.
The NPRM proposes the following:
- Increase the minimum salary for exempt employees to $679 per week;
- Increase the total annual compensation requirement for highly compensated employees to $147,414 per year;
- Periodic review to update the salary threshold;
- Allow employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10% of the standard salary level; and
- No automatic adjustments to the salary threshold.
The NPRM does not propose changes to:
- Overtime protections for:
- Police officers;
- Fire fighters;
- Laborers (i.e. non-management production-line employees); and
- Non-management employees in maintenance, construction, and similar occupations; or
- Changes to the job duties test.
What Does This Mean For Employers?
If this NPRM is adopted into a Final Rule, employers should be prepared to increase the minimum salary for exempt employees to $679 per week and pay employees who make less than $679 per week overtime pay for all hours worked over 40 in a workweek.
For more information, contact York Bowman Law, LLC.