Legal challenges likely, but employers urged to be ready for new overtime rule

by Tammy Binford

Employer interests are sounding off against the U.S. Department of Labor’s (DOL) proposal for a dramatic increase in the overtime threshold, but employers are still advised to take a close look at their exempt workforce to make sure their status is justified.

The DOL released its long-awaited proposed rule on August 30. If finalized, the rule would guarantee overtime pay for most salaried workers earning less than $1,059 a week, or $55,068 a year. The current threshold is $684 a week, or $35,568 a year.

In addition to setting a new overtime threshold that is $19,500 higher than the current level, the proposed rule would automatically update the threshold every three years to reflect current earnings data.

The proposed rule also would raise the overtime threshold for highly compensated employees to $143,988 a year, up from the $107,432 current threshold.

The federal Fair Labor Standards Act (FLSA) requires hourly workers to earn time-and-a-half pay for hours over 40 in a workweek. But certain workers are exempt from that requirement if they perform executive, administrative, or professional duties and earn the threshold amount. The proposed rule doesn’t significantly change the duties test, just the salary threshold.

Attorneys who work with employers on FLSA matters are advising employers to examine their options under a new overtime rule, but the attorneys expect a replay of the litigation that shut down a 2016 attempt to raise the overtime threshold.