COMING IN 2019: UPDATE TO FEDERAL OVERTIME RULE
As you may recall, an Obama era change to the federal overtime rule would have doubled the salary threshold for exempt employees from $23,660 to $47,476. This would mean that, under the Fair Labor Standards Act (FLSA), an employee making less than $913 per week would be entitled to overtime for any hours worked beyond 40 in a week. Much to the relief of employers, a federal judge blocked the rule from taking effect 10 days shy of its effective date. The judge ultimately held that the rule was invalid in August 2017.
Nevertheless, the discussion regarding an increase to the threshold has not gone away. The Department of Labor (DOL) under the Trump Administration has indicated a willingness to consider an increase, but not one as dramatic as previously proposed. The DOL previously had stated that the Notice of Proposed Rulemaking could be expected by October 2018, but has recently indicated that the proposed rule will be delayed until 2019.
The proposed change to the federal overtime rule will be informed by comments the DOL received from the public in response to it’s July 2017 request for information. We encouraged employers to submit comments on changes to the salary threshold last year. The public will have another opportunity to comment once the proposed rule is issued in 2019. A final rule is not expected until late 2019 or early 2020.
What is the proposed rule going to be? It’s difficult to say for certain. Secretary of Labor Alexander Acosta has stated that the $23,660 threshold needs to be updated. However, he agreed the $47,476 threshold proposed during the Obama Administration was excessive. Therefore, employers can count on an increase to the salary threshold being more moderate than the previous proposal.
For now, employers do not have to make any changes, but they should prepare for an eventual increase in the salary threshold. Any employees currently classified as exempt, but paid below $40,000 are the most likely to be impacted by a rule change. Employers should identify those employees now so they are prepared once the rule is finalized.
Nevada Association of Employers will continue to monitor any proposed changes to the overtime rule. To ensure you stay up-to-date on the latest developments, join our mailing list.