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DOL Proposes Increase To Salary Threshold For Overtime Exemptions

Volume: 18 | Issue: 6
March 13, 2019

On March 7, 2019, the U.S. Department of Labor (DOL) announced a new proposal to change the overtime exemptions under the Fair Labor Standards Act (FLSA). You may remember that in 2016, under the Obama administration, the DOL proposed to increase the salary thresholds for the "white-collar" overtime exemptions (for executive, administrative, professional, outside sales, and computer employees) to $913 per week ($47,476 per year) and $134,004 for the "highly compensated employee" exemption. However, a federal judge issued a nationwide injunction temporarily enjoining the DOL from implementing that rule. Under the Trump administration, the DOL changed its position and publicly declared its intention to "undertake further rulemaking to determine what the salary level should be."

The DOL now proposes to update the salary threshold for the white-collar overtime exemptions from its current $455 per week ($23,660 annually) to $679 per week ($35,308 per year). The new proposal also seeks to increase the total annual compensation requirement for the highly compensated employees exemption from $100,000 to $147,414 per year. The DOL does not propose any changes to the job duties tests for these exemptions. Moreover, "[i]n an attempt to align the regulations better with modern pay practices, the [DOL] also proposes to allow employers to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level test, provided such bonuses are paid annually or more frequently."

We encourage employers to review the DOL's Fact Sheet which provides additional details about the proposal. Once the proposal is published in the Federal Register, the DOL will accept public comments for 60 days. We will keep you updated on developments in this area and are available to answer any questions you have.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.