As we have been advising for the last several years, the Department of Labor has been considering an update to the overtime threshold under the Fair Labor Standards Act. Many anticipated we would see the change sometime this year.
On March 7, 2019, the Department of Labor issued its proposed rule which, if adopted, would raise the minimum salary threshold to $679 per week ($35,308 per year). Currently, the minimum salary threshold is $455 per week ($23,660 per year).
The proposed update is about where everyone expected the overtime threshold to land and a vast improvement in the minds of employers from the minimum threshold proposed under the Obama Administration ($913 per week or $47,476 per year). But what’s next?
There is no need for employers to begin making changes to their compensation structure just yet. Remember, this is just the proposed rule change. There is plenty that could happen between now and when the rule gets finalized.
Now is a good time for employers to evaluate where their organization stands and how their compensation structure may change (or may not) when the final rule is adopted. Likely there are many employees who would now fall below the salary threshold and would be entitled to overtime compensation.
More information about the proposed rule is available at www.dol.gov/whd/overtime2019. The Department of Labor encourages interested members of the public to submit comments about the proposed rule electronically at www.regulations.gov, in the rulemaking docket RIN 1235-AA20. Once the rule is published in the Federal Register, the public will have 60 days to submit comments for those comments to be considered.
Not sure if you have classified your employees correctly? Misclassification of employees as exempt is one of the most common violations. The salary threshold is just part of the equation and it’s usually the easiest part to meet. Where many employers get into trouble is with the job duties test. Regardless of what the final rule says about the salary threshold, employers should make sure they meet the other (often forgotten) requirement. Need help? Nevada Association of Employers (NAE) provides a helpful checklist to assist members with making the determination whether an employee is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA) or not.
