A push to change the longstanding salary threshold at which certain employees are eligible to receive overtime pay is moving forward.
The U.S. Department of Labor announced on March 7 a proposed change that would make in excess of one million more American workers eligible to receive overtime pay. The suggested change, which is expected to take effect in January 2020, would make the new threshold $35,308 or $679 per week.
Under the Fair Labor Standards Act, salaried employees who are in executive, administrative and professional roles generally are exempt from being able to earn overtime pay if they make more than $455 per week or $23,660 a year.
The Department of Labor relied on extensive public input before making a recommendation for a revised salary threshold. That process included six in-person listening sessions around the country and receiving more than 200,000 comments.
However, the notice of proposed rule-making issued by the Department of Labor maintains overtime protections for some professions including police officers, fire fighters, paramedics, nurses and certain laborers.
Additionally, the proposal doesn’t include automatic adjustments to the salary threshold.
A final rule is expected later this year.
To comply, employers would have several options:
- Increase employee salaries to meet the new threshold
- Modify job duties to meet overtime exemption standards
- Reclassify exempt employees as nonexempt and pay overtime wages
Advisers say employers can audit their exempt workforce now but should wait to make any salary or classification changes until after the Department of Labor issues its final rule.
Syndeo will offer more guidance on the modified salary threshold in the months ahead.
This would be the first change to the overtime salary threshold since 2004 and only the second since 1975.
The existing threshold was nearly doubled in 2016 before a Texas federal judge ruled the labor department overstepped its authority with the drastic threshold increase.
The ruling, which would have gone into effect in December 2016, halted a plan to require employers to pay overtime for salaried workers unless they made more than $913 per week or $47,476 a year.
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