The Department of Labor on March 7 proposed new rules to boost the salary threshold at which American workers are eligible for overtime pay.
Under the new DOL rulemaking, employees who earn under $35,308 a year must be paid overtime if they work more than 40 hours per week. That is about 30 percent higher than the current salary threshold of $23,660 that was set in 2004. The proposal is now in a 60-day public comment period.
The long-awaited proposal is less aggressive than an overtime rule pushed in 2016 during the Obama administration. That plan would have mandated overtime pay for those earning less than about $47,000 but was ultimately invalidated by a federal court in Texas. The Trump administration announced in 2017 it was reviewing Obama’s proposed rule and received more than 200,000 public comments that informed the development of its new rulemaking.
The Trump administration estimates its new overtime rule would provide overtime pay to about 1.1 million additional salaried workers. The proposal doesn’t establish automatic, periodic updates to the salary threshold as the Obama plan would have, although the Labor Department is asking for comments on how the agency should plan for future updates. The proposed rule also does not tinker with the current “duties test,” which is used to determine whether workers must be considered exempt or non-exempt from overtime.
“Our economy has more job openings than job seekers and more Americans are joining the labor force,” said Labor Secretary Alexander Acosta. “At my confirmation hearings, I committed to an update of the 2004 overtime threshold, and today’s proposal would bring common sense, consistency and higher wages to working Americans.”
After the Obama administration proposed its overtime rule in 2016, the issue was identified as the top issue of concern for association CEOs in an ASAE survey. ASAE and many other associations supported an update to the overtime rule but advocated that the new rulemaking be tied more closely to the rate of inflation so as not to saddle tax-exempt entities with an unworkable payroll burden.
“ASAE believes the DOL’s current proposal to update the overtime rule reflects a more reasoned approach to ensuring salaried Americans are fairly compensated for their work,” said ASAE President and CEO John Graham, FASAE, CAE. “There is no question that the 2004 salary threshold needed to be updated. The administration’s new rulemaking should also ensure that businesses can plan for payroll increases without jeopardizing their prospects for future growth and success.”