By Carrie Cherveny

In early 2019, the Department of Labor Wage and Hour Division announced a proposed rule that could make more than a million American workers eligible for overtime in the near future.

The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees overtime equal to one and one-half the employee’s hourly rate for all hours worked over 40 in a work week. Note that states and municipalities may have their own overtime and wage-and-hour laws that differ from the FLSA.

The proposed rule would boost the salary threshold eligible for overtime from the current $455/week (set in 2004) to $679/week, or $35,308 annually.

The rule also:

  • Increases the total annual compensation requirement for “highly compensated employees” (HCE) from $100,000 to $147,414 annually
  • Requires a periodic review and update to the salary threshold
  • Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level.

The proposed rule does not change current overtime protections for:

  • Police Officers
  • Fire Fighters
  • Paramedics
  • Nurses
  • Laborers including: non-management production-line employees
  • Non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers

Review Exempt Employee Salaries

In anticipation of the final DOL overtime rule, organizations will want to review their current exempt employee salaries to identify the impact these changes may have on the organization. Employers may want to assess the impact of reclassifying exempt employees who do not meet the new minimum salary to non-exempt.

Review your organization’s overtime rules and time and attendance systems. Make sure they are not only in compliance with the DOL, but also up-to-date with competing businesses and local edicts.

Contact your HUB Employment Practices Liability expert to determine if your business is properly positioned for future regulation changes.