Between the Supreme Court rulings on the Affordable Care Act and on same sex marriage, June would have gone down in the HR record books as a pretty momentous month … but wait, there’s more! A few days before Independence Day weekend, the Wage and Hour Division (WHD) of the Department of Labor issued a Notice of Proposed Rulemaking: Overtime. The rule proposes lifting the threshold for exempt workers from its current $23,660 ($445 a week) to $50,400 ($970 a week). This would mean that millions of workers would be entitled to overtime pay.
Per the Fact Sheet issued by DOL:
The Notice of Proposed Rulemaking (NPRM) focuses primarily on updating the salary and compensation levels needed for white collar workers to be exempt. Specifically, the Department proposes to:
set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually);
increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.
Key administration figures took to social media to explain the rationale behind the rule:
President Barrack Obama posted A Hard Day’s Work Deserves a Fair Day’s Pay at Huffington Post and Labor Secretary Tom Perez posted 5 Millions Reasons Why We’re Updating Overtime Protections on the U.S. at the Department of Labor Blog.
The law could go into effect as soon as 2016, but there is a rules process first which includes a period of public commentary. Interested parties are invited to submit written comments on the proposed rule at www.regulations.gov. The comment period will close on September 4, 2015. Only comments received during the comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.
Here’s a toolkit for learning more:
Employment law experts weigh in:
Philip Miles offers this brief video summary on New Overtime Regulations and the Avoidance Problem at Lawffice Space.
- Eric B. Meyer at The Employee Handbook: Five ways for proactive employers to prepare now for the new OT rules
- Maria Danaher, Employment Law Matters: The proposed overtime regulations: what they say, what they mean, and what to do now
- Rachelle Hill, JDSupra Business Advisor: DOL Releases Proposed Amendments to FLSA Overtime Regulations: Now is the Time to Reassess Compliance and Update Your Policies
- Jon Hyman, Ohio Employer Law Blog: Obama to announce new overtime regulations, but will they really matter?
- How to make sense of Obama’s big changes to overtime policy
- Obama’s new overtime rules: How they’d work and who they’d affect
- How companies should prepare for the Department of Labor’s overtime pay change
- How Will the Overtime Proposal Impact Manufacturers?
- How increasing overtime exemption thresholds will affect the retail and restaurant industries
- (prior post) Confusion about Exempt vs Non-exempt employees