OVERTIME EXEMPTION RULE

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OVERTIME EXEMPTION RULE

Many American employees receive overtime pay from their employers. In 2019, an anticipated announcement from the U.S. Department of Labor (DOL) regarding changes to the overtime exemption rules is expected.  A new federal overtime regulation is on the horizon that could make millions more Americans eligible for overtime – which might mean a steep hike in costs for employers.

The Fair Labor Standards Act (FLSA) overtime rule determines whether employees are eligible or exempt for overtime pay. Exempt employees, because of their rate of pay and type of work that they do, are not eligible for overtime pay for hours worked over 40 in a workweek. Nonexempt employees must be paid time and a half for any hours worked more than 40 in a workweek.

The DOL issued a Notice of Proposed Rulemaking to reevaluate the salary level for employees who are counted as “exempt” or unable to earn overtime pay. The rule would also define the process for calculating that salary level going forward. Meeting the March deadline would cap what has so far been a drawn-out process.

Labor Secretary Alex Acosta announced years back that the DOL planned to update the overtime rule, and the department began gathering public input in July 2017. Secretary Acosta has said he recognizes that the salary threshold needs to be increased—just not to the level under the 2016 rule.

The DOL has not yet declared its position on the overtime exemption issues. Experts say they expect the DOL to increase the minimum salary amount for exemption from overtime by a more modest amount than the prior Obama-era proposed rule. (The Obama administration’s 2016 rule that more than doubled—from $23,660 to $47,476—the minimum annual salary required to qualify for the Fair Labor Standards Act’s “white collar” exemption.) Possible rules revisions include raising the salary threshold above its current $23,660 per year. Anyone who makes less than that is eligible for overtime pay when they work more than 40 hours in a workweek.

The DOL will plan to reveal its position on the overtime exemption issue in March of 2019.