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DOL Announces New Proposed Overtime Rule

On March 7, 2019, the U.S. Department of Labor announced its much anticipated proposal to increase the salary threshold required in order to qualify for one of the so-called “white collar exemptions” from the Fair Labor Standard Act’s overtime requirements. The proposed rule would raise the salary threshold by about 50%, from $23,660 per year to $35,308. Salary calculations would include all non-discretionary bonuses. If ultimately implemented, this increase would make an estimated one million more American workers overtime eligible.

The proposed rule does not restore the salary threshold to its all-time high. In May 2016 the DOL published a final rule setting the salary threshold at $47,476 per year. However, that rule was enjoined from implementation and later invalidated by the U.S. District Court for the Eastern District of Texas. Since then, the salary threshold has remained unchanged.

In addition to this immediate increase in the salary threshold, the DOL’s proposed rule also recommends, but does not mandate, gradual future increases. According to the rule’s Preamble, the DOL intends to consider adjustments to the minimum salary threshold for exempt status every four years. The increases would not be automatic, as they were under the 2016 rule, but would be implemented only after a notice and comment period.

Finally, the proposed rule also increases the salary threshold for “highly compensated” employees from $100,000 to $147,414. Such “highly compensated” employees can qualify for a white-collar overtime exemption based on a streamlined “duties” test. As to employees compensated at an annual rate falling between $35,308 and $147,414, the more demanding “duties” test still applies.

Employers wishing to weigh in on the proposed rule may submit comments electronically at www.regulations.gov, in the rulemaking docket RIN 1235-AA20. After the rule is published in the Federal Register, the public will have 60 days to submit comments.

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About this Author

Mary Gambardella Litigation lawyer Wiggin Dana

Mary brings decades of experience in helping clients comply with ever-changing labor laws and regulations, as well as in managing employment challenges such as sensitive terminations, sexual harassment, reductions in workforce, discrimination claims, and severance agreements. She is a proactive resource for clients seeking her counsel on a variety of human resource issues before they become a costly crisis, as well as a fierce advocate when crises arise.

Mary is Chair of the firm’s Labor, Employment and Benefits Department and regularly represents employers in...

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Lawrence Peikes Employment litigation lawyer Wiggin Dana

Larry represents the interests of management in all aspects of the employer-employee relationship and is particularly experienced in litigation defense. He has advocated for employers in a wide range of employment cases—before arbitrators, mediators, and government agencies as well as in state and federal courts. In a field where most attorneys rarely appear before a judge, let alone a jury, Larry has successfully tried cases on both the federal and state levels. Despite his extensive courtroom experience, Larry is first and foremost dedicated to finding the best, most pragmatic business solutions to personnel relations challenges, with an eye toward avoiding litigation.

Larry's practice encompasses the full range of employment law issues, including workplace discrimination, sexual and other forms of harassment, wrongful discharge, wage-and-hour compliance, non-competition agreements, trade secret protection, and contract negotiations. Larry represents employers in administrative proceedings before such agencies as the U.S. Equal Employment Opportunity Commission; the Connecticut Commission on Human Rights and Opportunities; the New York State Division of Human Rights and its New York City counterpart; the National Labor Relations Board; the U.S., Connecticut, and New York Departments of Labor; and other administrative bodies charged to enforce federal and state labor laws.

When litigation proves unavoidable, Larry and his team of seasoned employment lawyers have an enviable record of success, disposing of lawsuits on motions, at trial, and by way of advantageous settlements.