U.S. Department of Labor Releases New Proposed Overtime Rules

The United States Department of Labor, Wage and Hour Division, has issued a proposed rule to update the salary test for the “white collar” overtime exemptions. The proposed rule would rescind and replace the 2016 Final Rule, which had been invalidated by a federal court in Texas.  While the proposed rule spans over 200 pages, the key provisions are summarized below:

  • Replace the minimum salary of $455/week ($23,660 annually) with $679/week ($35,308 annually). This is a much more modest increase than the $913/week ($47,475 annually) threshold which was contained in the invalidated 2016 Rule.
  • Increase the annual salary level for the Highly Compensated Exemption from $100,000 to $147,414. Notably, this is an even greater increase than the $134,004 salary level set forth in the 2016 Rule.
  • Allow certain non-discretionary bonuses and incentive pay to count towards 10% of the minimum salary levels.
  • Eliminate the automatic increases to the salary level which were built into the 2016 Rule, instead proposing to reassess the salary level every four years through notice and comment rulemaking.

The proposed rule must go through a comment period and is subject to further modification. The Department of Labor currently has a target implementation date of January 2020.  While it is entirely possible that the salary thresholds may change, or that the implementation date may be pushed back, employers should begin to plan and budget for the possibility that the new rule and salary levels may become effective at the start of next year.  We will continue to update our guidance as the proposed rule progresses through the comment and approval process.

This Labor & Employment Alert is intended to keep readers current on developments in the law, and is not intended to be legal advice. If you have any questions, please contact authors Michael D. Jones at 215.851.8461 or mdjones@eckertseamans.com, Brittany L. Stepp at 215.851.8512 or bstepp@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working.

© Eckert Seamans Cherin & Mellott, LLC, 2019, all rights reserved.

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Authors

Michael D. Jones

Member - Philadelphia

Brittany L. Stepp

Associate - Philadelphia