PAYDAY Workforce Solutions Blog

New Overtime Rule Proposed by DOL

On Apr 1, 2019

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

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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