DOL Overtime Rule Expected Soon

September 18, 2019

The U.S. Department of Labor (DOL) is expected to release its final rule to update federal overtime regulations in coming weeks. On Friday, Sept. 13, the White House Office of Management and Budget (OMB) signed-off on the DOL’s rule change first proposed in March which would increase the overtime exemption from $23,660 annually to $35,308 annually.

Specifically, the DOL’s rule as proposed in March would to increase the minimum salary that employers must pay certain workers to avoid overtime from $455 per week ($23,660 annually) to $679 per week ($35,308 annually). The proposal also would increase the total annual compensation required for the “highly compensated employee” overtime exemption from $100,000 to $147,414.

The DOL estimates that these changes will make more than one million additional American workers eligible for overtime pay and another 200,000 will see their incomes rise under changes for a smaller category of highly compensated workers who are also covered by overtime rules. Overtime-eligible employees must be paid time-and-a-half for the hours that exceed 40 a week. Many businesses pay overtime to hourly workers but often exempt managers and other salaried employees from the additional pay. The salary threshold is intended to protect workers who may have a manager title but low earnings—less than $455 a week at the current level.

The Trump administration is working to enact the rule prior to the 2020 elections in the case that Democrats make gains which–absent some kind of update in the near-term–could spur them to revive the Obama-era rules which would have set an even higher salary threshold of $47,476.

In 2016, a federal judge enjoined the Obama administration’s overtime rule. The appeals process bled into the change in administrations, until the Trump administration’s DOL dropped its defense of the Obama-era rule. But the agency simultaneously asked the 5th U.S. Circuit Court of Appeals to approve the use of a lower threshold because the federal judge who issued the injunction had questioned the legality of any salary threshold whatsoever in his decision.

Employment law experts anticipate the implementation date could be a relatively quick one with just three or four months to comply, and have encouraged employers to start preparing now.