U.S. Department of Labor Publishes Overtime Rule

U.S. Department of Labor Publishes Overtime Rule

South Dakota Retailers Association  

The U.S. Department of Labor (Department) has announced a Notice of Proposed Rulemaking (NPRM) that would make more than a million more American workers eligible for overtime.
Under currently enforced law, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week.  Workers making at least this salary level may be eligible for overtime based on their job duties.  This salary level was set in 2004.
This new proposal would update the salary threshold using current wage data, projected to January 1, 2020.  The result would boost the standard salary level from $455 to $679 per week (equivalent to $35,308 per year).
The Department is also asking for public comment on the NPRM’s language for periodic review to update the salary threshold. An update would continue to require notice-and-comment rulemaking.
In developing the proposal, the Department received extensive public input from six in-person listening sessions held around the nation and more than 200,000 comments as part of a 2017 Request for Information (RFI).
The NPRM maintains overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including: non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engi-neers, longshoremen, and construction workers. The proposal does not call for automatic adjustments to the salary threshold.
A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016.  As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held an appeal in abeyance pending further rulemaking regarding a revised salary threshold.  As the 2016 final rule was enjoined, the Department has consistently enforced the 2004 level throughout the last 15 years.
More information about the proposed rule is available at www.dol.gov/whd/overtime2019. The Department encourages any interested members of the public to submit comments about the proposed rule electronically at www.regulations.gov, in the rulemaking docket RIN 1235-AA20. Once the rule is published in the Federal Register, the public will be able to submit comments for 60 days in order for those comments to be considered.

National Retail Federation (NRF) summary of the overtime rule:

THe National Retail Federation (NRF) says the proposed rule generally tracks with what NRF outlined as supporting in their Request for Information (RFI), including use of the 2004 methodology to update the standard salary level.

 Specifically, the Department proposes:

  • Standard salary threshold: $679 per week ($35,308 annually), set using the 2004 methodology (20th percentile of full-time salaried workers in the lowest-wage census region, then and now the South, and/or in the retail sector nationwide).
  • Highly Compensated Employee threshold: $147,414 annual compensation level (setting the level equivalent to the 90th percentile earnings of full-time salaried workers nationwide). This methodology is the same as the 2016 rule.
  • Nondiscretionary bonuses and incentive pay: Nondiscretionary bonuses and incentive pay (including commissions) can satisfy up to 10% of the standard salary level if made on an annual or more frequent basis. Catch up payments can be made on an annual basis within one pay period of the 52-week period.
  • Duties test: No changes are made to the duties test.
  • Periodic updates: The rule invites public comment on a periodic update to the salary levels every four years through notice and comment rulemaking using the methodology set forth in updating the standard and HCE levels. The rule indicates that “the Secretary, however, may forestall proposing updates if economic or other factors so indicate.”

Fact sheet on the proposed rule

Fact sheet on overtime pay

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