DOL releases official proposed OT rule
Wednesday, April 3, 2019

DOL releases official proposed OT rule

By Payroll and Entitlements Editorial Staff

The Department of Labor’s official Notice of Proposed Rulemaking revising the agency’s white-collar exemption rules (29 CFR 541), which would raise the salary threshold to qualify as exempt from overtime, was published in the Federal Register on March 22, giving interested parties 60 days from that date within which to comment.

As indicated in the DOL’s release, the proposed rule would substantially increase the salary threshold, below which employees must be paid overtime if they work more than 40 hours per week, from the current $455 per week ($23,660 annually) to $679 per week (equivalent to $35,308 per year). Above this salary level, eligibility for overtime varies based on job duties.

The DOL’s earlier release of the proposal prompted quick and mixed reactions.

Highly compensated. The proposed rule also increases the total annual compensation requirement for "highly compensated employees" from the currently enforced level of $100,000 to $147,414 per year. Above this salary floor, employees are automatically exempt from overtime.

Bonuses and incentive payments. Employers would be permitted to use nondiscretionary bonuses (such as nondiscretionary incentive bonuses tied to productivity and profitability) and incentive payments (including commissions) that are paid annually—or more frequently—to satisfy up to 10 percent of the standard salary level. There is no change to the use of bonuses for purposes of establishing the highly compensated employee salary floor, however.

The DOL is inviting comments on whether the proposed 10 percent cap is appropriate, or if a higher or lower cap is preferable.

Notably, there is no change to the duties test and no automatic adjustment to the salary threshold.

Comments. Information on how to submit comments are detailed in the DOL’s notice.

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