The DOL’s proposed rule seeks to raise the annual minimum salary requirements under the Fair Labor Standards Act (FLSA) overtime exemptions from the current level of $23,660 ($455 per week) to $35,308 ($679 per week). Although the DOL’s proposed rule aims to impose a nearly 50% increase from the current rule, the proposed minimum salary requirement is still less than the Obama-era proposed rule which would have set the minimum salary at $47,476, or $913 per week.
The DOL’s proposed rule was developed from the extensive public input from over 200,000 comments submitted as part of the DOL’s 2017 Request for Information and 6 in-person listening session held throughout the country. The overall response indicated that the current salary and compensation levels needed to be increased.
The DOL’s proposed rule includes the following:
The minimum salary required for an employee to qualify for exemption will increase from the current level of $455 per week ($23,660 per year) to $679 per week ($35,308 per year).
The DOL will commit to a periodic review to update the salary threshold. Any updates to the rule would be subject to the required notice-and-comment rule-making procedures.
The total annual compensation requirement for “highly compensated employees (HCE) will increase from the current level of $100,000 per year to $147,414 per year.
Employers will be permitted to use incentive payments (which includes commissions) and non-discretionary bonuses that are paid annually (instead of quarterly) or more frequently as a catch-up payment if the non-discretionary pay is not sufficient to satisfy the required salary at the end of the year (no more than 10% of the standard salary level – $3,530.80). However, the standard salary level for HCE salaries ($35,308) must be met without including any incentive payments (which includes commissions) and non-discretionary bonuses, although such incentive payments and non-discretionary bonuses may be included to satisfy the annual salary requirement of $147,414.
No changes will be made to overtime protections for police officers, fire fighters, paramedics, nurses, laborers, and non-management employees in maintenance, construction and similar occupations including carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers.
No automatic adjustments will be made to the salary threshold.
No changes will be made to the job duties test.
Employers have 60 days to submit comments on this proposed rule to the DOL. The DOL will then publish a final rule after taking into consideration any comments submitted. It is anticipated that the proposed rule will take effect in January 2020.