New overtime salary threshold proposal would cover 1.3 million more workers
The Department of Labor is considering a new $35,000 threshold for overtime pay, a determination that will no doubt face legal challenges.
The Obama administration wanted to raise the salary below which workers would be entitled to overtime to $47,000 from its current level of $23,660. That didn’t happen, thanks to a Texas judge who blocked it, but that wasn’t the end of it. The law, like many others, entered was dormant but not dead. This week, the Labor Department unveiled its revised proposal, which increases the threshold to $35,308 and would make 1.3 million more Americans eligibility for overtime pay.
“Employers who recall the feeling of panic when the Obama administration issued its Final Rule doubling the salary basis threshold in May 2016 will breathe a sigh of relief over the much smaller increase proposed by the Department of Labor yesterday,” says Ryan Mick, a partner with law firm Dorsey & Whitney.
According to Bloomberg Law, the measure is still likely to face court challenges from both sides of the issue—both worker advocates, who say the DOL hasn’t done the analysis to justify abandoning the Obama-era rule, and businesses, who fear what it will do to payrolls.
The current proposal does not include guidance for automatic adjustments or regional variations in the threshold, as has been recommended by some experts. Instead, the rule calls for updating levels every four years, following a notice and comment period. In addition, no changes were made to the duties test.
”Although consistent with expectations, employers will also be relieved that the Department of Labor did not propose changes to the duties tests for exemptions under the FLSA, which would have required many employers to undertake a far more complex analysis to determine exempt status for many employees,” Mick says.
The proposed rule has been held up since DOL’s intended release date of July 2017, although the White House has supposedly leaned on DOL to take action on several highly anticipated rules, including the “joint employer” standard and determining “regular rates” of pay as they related to overtime.
While this proposal would increase the number of people who would qualify for overtime pay, that field is by no means as wide as would have received it under the original Obama-era rule. In addition, among the considerations in the new proposed overtime law are job duties, which, according to critics of the proposal, have actually cut down on the number of workers who would get time and a half. The “duties test” determines whether workers making more than the salary threshold are supervisors and thus not entitled to overtime wages.
Before being finalized, the DOL will open the proposal to a 60-day comment period. If approved, the new rule would take effect in January 2020.
“Employers should not forget that the Department of Labor’s proposed rule has no bearing on state law. If applicable state law imposes a higher minimum salary requirement or a more onerous duties test, employers in that state must continue to comply with state law.” Mick says.
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