On March 7th, the Department of Labor (DOL) announced a proposal to the salary-level threshold for the overtime pay regulation. On March 21st the DOL published the notice in the federal register, opening a 60 day public comment period which will close on May 21st.
In May 2016, the DOL released the Final Rule on the overtime pay regulation raising the threshold from $23,660 to $47,476 for full-time exempt employees, but that effort was blocked by a U.S. District Court Judge and the appeal was denied. Since that time, employers have been expecting a new proposal to be released.
The new proposal raises the salary-level threshold to $35,308 ($679 per week), meaning individuals who make under $35,308 must be paid overtime if they work more than 40 hours per week. The proposal does not call for automatic adjustments to the salary or create salary levels based on the region of the country.
NATM's HR consultants released the following information in regard to this potential change:
What does this mean for employers? To prepare for the implementation of a potential Final Rule, employers should begin reviewing and analyzing the positions held by exempt employees who are paid less than $679 per week.
First, the employer should review each exempt employee’s job description. In order for an exemption to apply, an employee’s specific job duties and earnings must meet all applicable FLSA requirements. Job titles never determine exempt status under the FLSA.
Second, a salary analysis should be completed to determine how many hours on average an employee works in a year or within a pay period. As a business owner or senior level manager, you should make this analysis: Is it more cost effective to pay the overtime amount of 1½ times the employee’s regular rate of pay for any time worked over forty (40) hours or to increase the employee’s wage to meet the new salary threshold of $35,308?
Finally, once the position description review and salary analysis have been completed, an employer has several options to remedy the situation and ensure compliance with the proposed regulation changes.
Wait or act now? While a Final Rule has not been released, it may be in the best interest of employers to start reviewing options to ensure compliance with the proposed regulation changes. The proposed regulation changes are subject to a public comment period, which allows time for the public to express its views and concerns regarding the actions of an administrative agency. These new proposed regulations are anticipated to take effect in the latter part of 2019.
More information about the proposed rule is available here. NATM will keep its members apprised of development as the proposal is currently in a 60 day public comment period (which began March 7th). Should you have any questions, please reach out to NATM Executive Director, Kendra Ansley at Kendra.Ansley@natm.com or at 785-272-4433.