On March 7, the Department of Labor (DOL) released a Notice of Proposed Rule Making (NPRM) that looks to revise overtime regulations by updating the salary and compensation levels that workers need to be considered exempt. If finalized as proposed, DOL estimates that 1.3 million currently exempt employees would become non-exempt compared to the 2004 thresholds.
The NPRM specifically proposes to:
- Update the salary threshold from the current $455 per week, or $23,660 annually, to $679 per week, $35,308 annually. Workers making at least this new salary level may be eligible for overtime based on their job duties.
- Increase the total annual compensation requirement needed to exempt highly compensated employees to weekly earnings of full-time salaried workers earning $147,414 annually, up from the current $100,000.
The NPRM is an effort to update the 2004 threshold levels that the DOL has been enforcing the past 15 years. A final rule to change overtime thresholds was blocked in 2016 after Nevada and 20 other states filed an Emergency Motion for Preliminary Injunction. A judge found it likely that DOL had overstepped its authority by raising the salary threshold that businesses are to use to determine whether employees are exempt from being paid overtime.
To develop the new proposal, DOL received wide-ranging public input from six in-person listening sessions held around the country and from more than 200,000 comments drawn from a 2017 Request for Information (RFI).
All comments concerning the NPRM are due by May 21, 2019 and any proposed changes would not take effect until after publication of a final rule. Federal contractors who do not currently provide their employees overtime are advised to begin planning for the potential impact this regulation could have on their businesses.