For the second time in three years, the U.S. Department of Labor (DOL) released new salary requirements for employees to be classified as exempt from overtime. The DOL released its long-awaited proposed rule which, if adopted, would set the minimum salary threshold at $679 per week, annualizing to $35,308 per year.
For now, the proposed rule does not include an automatic update provision (which many were concerned would simply serve to periodically inflate the threshold level), nor does it revise the duties test that accompanies the rule.
Recent history of overtime rule proposals:
Many THLA members will remember that in May 2016, the DOL released rules that would have set the minimum salary threshold would be increasing to $913 per week (which would have annualized to $47,476, more than double the existing $23,660 annual threshold), and the amount would be “updated” every three years (meaning that it will likely increase with each “update”).
The new minimum threshold was set to become effective on December 1, 2016, and the “updating” would begin on January 1, 2020. But in a last-minute development, a federal judge in Texas blocked the overtime rule from taking effect just days before the December 1, 2016 implementation date. After Donald Trump was inaugurated and Alexander Acosta installed as head of the DOL, the new DOL leadership indicated that it would no longer advocate for the $913 per week proposal but would instead undertake further rulemaking to determine what the salary level should be.
Will the new 2019 proposal become law?
So far, the DOL’s rules are only proposed, and are not the final law. However, national labor law experts tell us there is a better chance the $679 per week threshold will become the new requirement, since it is far lower than $913 per week proposal from 2016, and is a more reasonable increase from the current $455 per week threshold that has been in place since 2004.
Many twists and turns might occur before this proposed rule is finalized, and it advisable to start evaluating what 2020 might look like for your compensation system if the DOL’s proposal comes to fruition in its current form.
Watch for further updates.
THLA will keep you informed as the DOL’s proposed rules progresses. We anticipate the DOL will roll out a final rule over the summer. In the meantime, THLA will provide feedback on the proposed rules to the American Hotel & Lodging Association’s Labor Relations Committee for inclusion in the hotel and lodging industry’s formal commentary to the DOL.