By: Leah K. Sell, Esq.
On March 7, 2019 the United States Department of Labor (DOL) announced a Notice of Proposed Rulemaking (NPRM) regarding an increase in the minimum salary used to qualify an employee as exempt from overtime.
The proposed rule would affect an estimated 1 million workers, and their employers, requiring those employees to either be paid overtime or receive a salary increase. The current minimum salary for an exempt employee is $455 per week ($23,660 per year). The new rule proposes an increase to $679 per week ($35,308 per year).
Up to ten percent of certain nondiscretionary bonuses and incentive payments could be included in this new salary minimum. The new proposed rule would also formally void the 2016 final rule, which is still pending under a Fifth Circuit appeal. The rule does not include any changes to duties tests, the other component utilized to determine if an employee is exempt from overtime.
Once the new proposed rule is published in the Federal Register, the public will have 60 days to comment. Reviewers seek the public’s input on a planned periodic four-year increase to the minimum salary, as the new rule does not provide for automatic escalation. Given the comment and review periods, the new proposed rule is unlikely to be enacted prior to January 2020, although election cycles could cause the process to accelerate.
Employers may want to take the opportunity now to review current exemption and overtime policies and begin to contemplate classification changes. This is also a good time to address other wage and hour concerns and issues.
More information about the new proposed rule is available at www.dol.gov/whd/overtime2019.
To learn more about the proposed rule, please contact Leah K. Sell. Leah is an Associate with Leech Tishman and a member of the firm’s Employment, Corporate, Litigation, Medical Cannabis and LaunchPad Start-Up Services Groups. Leah is based in Leech Tishman’s Pittsburgh office and can be reached at 412.261.1600 or via email at email@example.com.