Employers will recall during the Obama administration that the salary threshold for determining overtime eligibility under the Fair Labor Standards Act was changed from $23,660 per year to $47,476.00 per year. Many employers modified their own employment policies to meet the new standard despite the federal regulations never being implemented due to a successful court challenge.
The Trump administration has now ceased defending the Obama proposed rule and instead has proposed a new threshold of $35,308 per year with no automatic adjustments. The new proposed rule also would allow a portion of certain non-discretionary bonuses and incentive bonuses to be used to calculate the new threshold and would increase the highly compensated employee exemption threshold from $100,000 per year to $147,414 per year. The other factors in determining whether employees are exempt from the overtime rules continue to apply.
At the time this summary was posted, the proposed rules were not available on the Federal Register website, but upon publication there will be a 60 day public comment period. While the salary threshold for exemption from overtime rules is clear, the other factors are not a bright line test Employers are encouraged to obtain legal and accounting advice whenever classifying employees as exempt from the overtime rules to ensure that their own policies comply with the law and their employees consistently apply such practices.
This alert is not intended to contain legal advice or to be an exhaustive review. If you have any questions about the Department of Labor’s current or proposed salary threshold for overtime eligibility, or need advice on classification of employees please contact John Matteo, Esq., Firm President and Chair of the Employment Practice Group.