New Overtime Rule Proposed by DOL

On March 7, the U.S. Department of Labor released a notice with an update on a highly-anticipated new overtime proposal since the last Obama Administration proposal that was stalled a few years ago.

Under currently enforced law, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. Workers making at least this salary level may be eligible for overtime based on their job duties. This salary level was set in 2004.

This new proposal would update the salary threshold using current wage data, projected to January 1, 2020. The result would boost the standard salary level from $455 to $679 per week (equivalent to $35,308 per year).

The Department is asking for comments from the public on this matter and has held six in-person listening sessions around the nation.

Although the rule is not finalized yet, Tammy McCutchen, a principal at Littler Mendleson law firm and former administrator of the Department of Labor’s Wage and Hour Division, advises employers to begin preparing now in hopes of making compliance easier when the rule becomes final.

McCutchen advised at the Society for Human Resource Management’s legislative conference last month that employers may want to evaluate and change their exempt classifications.

“I would pull everyone earning $38,000 and start playing with the numbers to get a list of employees that need to be reclassified versus those that you might just need to do a slight bump in salary,” she noted.

She advised employers to consider other factors when reclassifying employees:

  • Benefit plans: Are some benefits only offered to exempt employees?
  • Timekeeping and payroll: Do employees that might be affected travel, and are there policies in place associated with travel?
  • Communications: Do you have the right communications plan in place to apprise workers about the changes?
  • Training: Do managers know what activities constitute work?
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