Department of Labor Proposes Increase to Salary Threshold

Employment Alert

(by John McCreary and Stephen Antonelli)

Under the current law, for an employee to be exempt from the FLSA’s overtime provisions, he or she must earn at least $23,660 per year ($455 per week) on a “salary basis” and perform the job duties described in the executive, administrative, professional and other exemption categories recognized by DOL. If enacted, that salary threshold would rise to $35,308 ($679 per week) under the new rule, which could become effective in January 2020.

The job duties tests will not change. This salary increase would mark the first increase in the salary threshold since 2004. The new rule would enable approximately one million more employees to earn overtime pay.  A more drastic increase to the threshold was approved by the Obama administration and blocked by a federal judge in Texas shortly before it was to become effective. That increase would have doubled the salary threshold and enabled over four million additional employees to be eligible to earn overtime.

In addition to increasing the overtime salary threshold, the final rule would also:

  • increase the total annual compensation requirement for highly compensated   employees (HCE) from $100,000 to $147,414;
  • maintain overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including, non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers; and
  • make a commitment to periodically review the salary threshold, although any update would not be automatic and would continue to require notice-and-comment rulemaking.

More information about the proposed rule is available at www.dol.gov/whd/overtime2019. Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics. If you have any questions or need assistance in addressing the above-mentioned area of concern, please contact John A. McCreary, Jr. at (412) 394-6695 or jmccreary@babstcalland.com, or Stephen A. Antonelli (412) 394-5668 or santonelli@babstcalland.com.

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