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US DOL Proposes New Overtime Rule

March 8, 2019

By J. Chris Duckworth

The United States Department of Labor (DOL) has proposed a new rule that would raise the salary threshold required to qualify for overtime exemptions to $35,308 per year, up from the current threshold of $23,660 per year that was set in 2004.  The rule also proposes to increase the Highly Compensated Employee exemption from $100,000 per year to $147,414 per year.  The DOL states that if finalized, these updates to the Fair Labor Standards Act’s regulations would make more than one million additional workers in the country eligible for overtime. 

Generally, employees must earn overtime unless they qualify for a “white collar” exemption.  To meet these exemptions, employees must be paid on a salary basis that meets or exceeds the minimum salary threshold and must meet certain tests concerning their job duties. 

In 2016, a Texas court blocked enactment of a 2016 DOL overtime rule that would have raised the overtime salary exemption to $47,476 per year.  The DOL requested public input on an appropriate salary threshold increase for white collar exemptions, suggesting that it was abandoning the 2016 rule but that a new salary threshold may be proposed. The new proposed rule is the long-awaited replacement of the 2016 rule. There will be a 60-day comment period on the rule.

If the proposed rule is enacted, employers should review their exempt job classifications in the applicable salary ranges and make important decisions about whether to reclassify those positions as nonexempt and eligible for overtime or whether to potentially increase the salary amount to maintain exempt status. 

We will keep you updated on any new developments. In the meantime, if you have any questions about the proposed overtime rule, or if your organization would like assistance in assessing its overtime pay practices, please contact Bullard Law.

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