DOL to Send Federal Overtime Rule to White House for Review

 

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The U.S. Department of Labor (DOL) wants to finalize the federal overtime rule as soon as possible under President Donald Trump's leadership.

The DOL plans to send the rule to the White House Office of Management and Budget Aug. 12 for final review, according to Bloomberg Law, just five months after proposing the rule. The department received more than 116,000 comments on the proposed changes.

The rule would raise the salary threshold for the Fair Labor Standards Act's (FLSA's) white-collar exemptions to $35,308 per year from $23,660. A blocked Obama-era rule would have raised the threshold to about $47,500, and worker advocates, as well as some Democratic lawmakers are still pushing for that level. Business groups, however, generally support the Trump administration's proposed increase.

The Society for Human Resource Management (SHRM) stated in comments that it supports the threshold being set at $679 per week, or $35,308 annually.

To be exempt from overtime, employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.

We've rounded up SHRM Online's news and resources on this topic.

Proposed Rule Would Cover More Workers

If finalized, the new overtime rule would result in the reclassification of more than a million currently exempt workers as nonexempt and an increase in pay for others above the new threshold. The proposal does not call for automatic adjustments to the salary threshold, does not create different salary levels based on region of the country and does not make any changes to the duties tests.

(SHRM Online)

Business Groups and Worker Advocates Disagree over New Threshold

The business community has described the proposed salary threshold as fair. Some employers worried that if the threshold was raised too high they would have to reduce benefits, limit promotion possibilities, delay the creation of new roles or eliminate existing positions to cover the higher costs. However, some lawmakers have said a $35,000 threshold is too low. Rep. Mark Takano, D-Calif., for instance, said the proposal is "woefully inadequate" compared to the Obama administration's targeted level.

(SHRM Online)

Threshold Rises for Highly Compensated Employees

The DOL's new proposal would raise the salary cutoff for highly compensated employees to $147,414 from $100,000. Under this special rule, employees whose total compensation meets the higher threshold are eligible for exempt status if they meet a reduced duties test.

(SHRM Online)

[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]

Exempt Status Requires More Than Salary

Meeting the salary cutoff is just one requirement for classifying workers as exempt. Employers should also take the time to review workers' job duties to ensure they satisfy the applicable exemption's criteria.

(SHRM Online)

Don't Ignore State Overtime Exemption Rules

Multistate employers may be able to apply the FLSA's rules in some jurisdictions but not others, because some states have higher salary cutoffs and different duties tests. Here's what employers need to know about state laws.

(SHRM Online)

Timeline: Overtime Rule History

The DOL has raised the exempt salary threshold periodically since the FLSA was enacted. The first salary threshold was set in 1938 at an annual income of $1,560. This timeline reflects the twists and turns in this rulemaking's history.

(SHRM Online)

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