U. S. Department of Labor Proposes New Federal Overtime Rule

Last Updated on October 9, 2020

Pending Regulation Would Make More Americans Eligible for Overtime Pay

After months of speculation, the U. S. DOL has proposed an increase of the threshold for employees who are eligible for overtime pay. Currently, the Fair Standards Labor Act (FSLA) states that salaried employees, such as managers and other specialized employees, are exempt from being paid overtime if they make more than $23,660 per year. The DOL Notice of Proposed Rulemaking will consider a new threshold of $35,308 per year.

What Employers Need to Know About the Proposed Rule

  • This regulation is currently pending. Employers should NOT immediately make any changes to their compensation structure in regards to this rule. The proposed regulation may also change slightly once it is published.
  • The exact amount of time it will take for the confirmation or rejection of the new OT rule is unclear, but some employment attorneys are speculating it will happen within the next year. Once the rule has passed, there will be a 60-day public comment period before it takes effect.
  • If the rule passes as currently proposed, it will reclassify over 1 million workers who are currently exempt from overtime pay as nonexempt.
  • In order for an employee to meet the exemption status, they must not only earn more than the salary threshold, but must also perform primarily professional, administrative or supervisory duties.
  • Employers will be allowed to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level.

MyHRC recommends that employers perform an audit now of all salaried employees, especially those whose salary falls between the $23,660 and $35,380 thresholds, to determine how this proposed rule would affect your company. This will allow you to strategize and develop a plan on how to minimize its affect on your business.

We will continue to provide updates on the progress of the rule.

Please contact us if you have additional questions about how your business needs to be prepared.