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U.S. Department of Labor Issues Notice of Proposed Rulemaking to Update Overtime Regulations

Earlier this month, the U.S. Department of Labor issued a proposed overtime regulation that, if enacted, would result in more than a million workers no longer being exempt from overtime.

Under the current law, the Fair Labor Standards Act's so-called white collar overtime exemptions set the minimum salary threshold at $455 per week ($23,660 annually). The DOL's proposal would raise the threshold to $679 per week (equivalent to $35,308 per year). The DOL also proposed raising the total annual compensation requirement for highly compensated employees, which are subject to a minimal duties test, from $100,000 to $147,414. Notably, in both instances, employers would be allowed to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level. Finally, the DOL contemplates regular increases to the salary threshold every four years, although such increases would still be subject to the public comment process.

You may recall that the Obama administration attempted to significantly raise the overtime threshold in 2016 to $913 per week ($47,476 annually) with automatic regular increases thereafter. However, that regulation was quickly blocked in the federal court system so the planned increase never went into effect. A similar effort to block the DOL's latest proposal is less likely since the proposal is more modest than the 2016 revision and does not feature automatic increases to the salary threshold.

The opportunity for public comment on the proposed regulation is now underway and will close on May 21, 2019. Following this comment period, it is expected that the proposal will be rolled out as is or perhaps subject to certain modifications. We will continue to report on the latest developments as they happen.

In the meantime, employers should begin both financial and logistical planning for the implementation of these rules. This proposal also serves as a good reminder to review and revisit your current classifications of employees and the effect that the proposed regulation could have on those classifications. Remember that the "salary test" is just one component of the popular white collar exemptions, and it is critical to frequently examine whether employees truly meet the exemptions' job duties components. More information about the proposed rule is available here.

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About this Author

Gordan Hill Employment Litigator Hill Ward Henderson

Gordon is a Shareholder in the firm’s Litigation and Employment Law Groups, and is the firm's Assistant General Counsel for Labor and Employment matters. His practice primarily involves employment litigation and counseling, as well as noncompete litigation and general commercial litigation.

In his employment practice, Gordon advises, represents and defends corporate clients in a broad spectrum of employment-related issues. Gordon has successfully defended clients in a wide variety of employment-related litigation, but...

Jeff Wilcox Litigation Attorney Hill Ward Henderson Law Firm

Jeff is a Shareholder in the firm’s Litigation Group. His practice primarily focuses on employment law, including wage-hour compliance, FMLA and ADA compliance, allegations of discrimination and harassment, non-compete litigation, and handbook and policy drafting. 

Jeff is active in both professional and Bar-related activities.  He currently serves as a Director on the Hillsborough County Bar Association, Young Lawyers Division Board, and is a member of the Employment and Labor Law Committee in the Defense Research Institute.  In 2014, Jeff received the Hillsborough County Bar Association’s Outstanding Young Lawyer Award.

An honors graduate of Florida State University College of Law, Jeff served as a clinical intern with North Florida Legal Services in Tallahassee. 

In his time outside of the firm, Jeff enjoys spending time with his wife, Britney, and following sports, especially Florida State football.

Matthew Hall Insurance Litigator Hill Ward Henderson

Matthew practices in the firm’s Litigation group, primarily focusing in complex commercial litigation, insurance coverage disputes, management-side employment matters and federal court practice. The diversity of Matthew’s practice is reflected in the diversity of the clients he represents: from Fortune 100 companies to large insurance companies to small and up-and-coming businesses to individuals. Matthew has worked to obtain six-figure recoveries on behalf of his clients in breach of contract actions and successfully defended other clients from multi-million dollar...

Melina Garcia Litigation Attorney Hill Ward Henderson

Melina is an Associate in the firm’s Litigation Group. Her practice focuses on general and complex commercial litigation, including creditors' rights and employment law. 

Melina graduated magna cum laude from Florida State University College of Law with a Certificate in Business Law with high honors. 

While in law school, Melina served as a judicial intern for the Honorable Judge Edward LaRose, of the Second District Court of Appeal. She also served as a judicial intern for the Honorable Judge Karen K. Specie, of the Northern District of...

Kirsten Vignec Employee Benefits Attorney HIll Ward Henderson

Kirsten is a Shareholder in the firm's Corporate & Tax Group and practice co-chair of the Executive Compensation & Employee Benefits Group. Kirsten’s practice involves employee benefit matters associated with the design and ongoing administration of executive deferred compensation plans, welfare benefit plans, Section 401(k) plans, profit sharing plans, and pension plans. Kirsten represents tax-exempt entities, for-profit, private, and publicly-traded companies.

Kirsten represents clients before the IRS, DOL, and the PBGC with respect to employee benefits matters.