Labor officials estimate these latest overtime changes will affect nearly 4 million employees.
Last week, the U.S. Department of Labor (DOL) proposed yet another set of revisions to section 13(a)(1) of the Fair Labor Standards Act (FLSA).
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These latest revisions would entitle millions of workers who are now exempt from overtime requirements to time and a half pay when they work more than 40 hours in a workweek.
Additionally, this DOL proposal would raise the salary test from its current $35,568 level to $55,068 as the annual salary threshold. Employees below this new level working more than 40 hours in a workweek will remain eligible for overtime pay.
In 2016, under the Obama Administration, the DOL attempted to more than double the minimum threshold, from $23,660 to $47,476. The increase was overturned by a federal judge in Texas just 10 days before it was set to take effect, on the grounds that the DOL exceeded its authority by raising the threshold too high. The ruling also questioned whether the DOL had authority to set any threshold whatsoever. Effective Jan. 1, 2020, the Trump Administration successfully raised the threshold to its current level of $35,568.
Currently, the FLSA requires employers to pay employees minimum wage, and there is an overtime requirement for time and a half pay for all hours worked over 40 in a workweek.
Under section 13(a)(1) in its current form, there is an exemption for this time and a half pay requirement for employees working in a “bona fide executive, administrative, or professional capacity” (EAP exemption or white-collar employees).
To meet this EAP exemption:
The employee must be paid a predetermined, fixed salary not subject to reduction;
The among of salary paid must meet a minimum specified amount; and
The employee’s job duties must primarily involve executive, administrative, or professional duties.
The DOL’s latest proposal increases minimum exempt salary levels to $1,059 per week ($55,068/year), which is the 35th percentile of weekly earnings of full-time salaried workers, arguing that the proposed changes will “better define and delimit which employees are employed in a bona fide EAP capacity.”
The DOL estimates that 3.4 million currently exempt employees who earn at least the current salary level of $684 per week, but less than the new proposed standard salary level of $1,059 per week, would receive overtime payments in the first year of the proposal’s enactment. In addition, 248,900 employees who are currently exempt under the current standards would be affected by the proposed increase.
Beginning Sept. 8, comments on how this proposed change would affect small-business owners opened for 60 days. Submit comments here, and follow NSBA as we track when comments open and the latest from the DOL.