Excerpt from legal brief by MTAC Partner Wilson Elser.
On March 7, 2019, the Department of Labor (Department) announced a proposed rule that would make more than a million more workers in the United States eligible for overtime. The Department seeks to update and revise regulations set forth under the Fair Labor Standards Act (FLSA) implementing the exemption from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. This proposed changed would raise the current-enforced salary level for exemption, and as a result, would extend overtime protection to more workers.
Background of FLSA
Under the current Department regulations, most white-collar employees—such as executives and supervisors—are exempt from the FLSA rules and are not paid overtime for workweeks in which they work more than 40 hours if they satisfy two conditions: (1) they must perform what the Department has deemed as “exempt” duties; and (2) they must receive a salary below $455 per week ($23,660 annually). Workers making at least this salary are eligible for overtime based on their particular job duties. The proposed rule focuses on the minimum salary requirement.
This proposal comes more than two years after a federal judge granted a nationwide injunction to prevent the Department’s 2016 salary threshold from taking effect. In May 2016, the Department issued a rule increasing the standard salary level, which was declared invalid by the United States District Court for the Eastern District of Texas, and is being held in abeyance on appeal with the United States Court of Appeals for the Fifth Circuit. Following this, the Department collected comments from the public on changes to the salary requirements.
The Department proposes to rescind the 2016 rule in three major ways. First, the new rule seeks to update the minimum weekly salary “to reflect growth in wages and salaries, and allow the inclusion of certain nondiscretionary bonuses and incentive payments to count towards up to ten percent of the standard salary level.” The Department’s proposal would extend the standard salary level for overtime to $679 per week—or $35,308 annually. Overtime eligibility above this salary level would be based on the employee’s job duties.
The complete legal brief from Wilson Elser is available online.