U.S. Department of Labor Proposes Increasing 2004 Salary Levels for Overtime Eligibility

The U.S. Department of Labor’s Wage and Hour Division recently proposed a rule that would raise the salary levels for certain employees who are eligible for overtime if they work more than 40 hours per week. It would be the first update in 15 years. Currently, those who make less than $455 per week, or $23,660 a year, are required to be paid overtime if they work more than 40 hours per week. (This has been in effect since 2004.)

Who is eligible for overtime is dependent on whether the employee is exempt or non-exempt. A non-exempt employee can earn overtime if they earn at least the federal minimum wage or earn less than the current DOL salary threshold. They can be a salaried or hourly employee, regardless of their field of employment.

Exempt employees fall into three categories: executive professional, and administrative. Those in executive roles must manage a company or a department of the company, oversee at least two employees and make personnel decisions in the hiring, termination, promotion, and demotion of employees. Administrative employees must be performing office work as it relates to the management or business operations and makes their own judgments on prioritization of business matters. Professional workers must have advanced knowledge in highly specialized fields, such as teaching, computer science, and engineering. (It is important to note that determining exempt and non-exempt status is based on job duties, not job titles.)

Under the new proposal, those making less than $679 per week ($35,308 per year) and at least this amount would be eligible for overtime, effective January 1, 2020.

In addition, the new proposal includes changes to the Fair Labor Standards Act (FLSA) involving exempt employees. Among them, those being paid at least $679 per week on a salary or fee basis would continue to be exempt.

Currently, highly compensated employees (HCE) who earn at least $100,000 a year are exempt; the Wage and Hour Division is proposing to raise the minimum to $147,414 a year. By doing so, according to the Wage and Hour Division, it would help employers better determine which workers are considered exempt and would reclassify up to 1.3 million workers as non-exempt.

Labor Secretary Alexander Acosta said these updates were long overdue since more people are entering the workforce. The agency held a series of listening sessions and, as part of a Request for Information in 2017, received more than 200,000 comments. Keith Sonderling, the Wage and Hour Division’s acting administrator, said those who submitted comments on the proposal “overwhelmingly agreed” that the salary threshold should be raised. Doing so, according to the agency, would allow an additional one million U.S. workers to be eligible for overtime.

This proposal follows the changes the Obama administration sought to make in 2016. The Obama overtime rule would have raised the salary threshold to $913 a week, or $47,476 a year with automatic adjustments every few years (unlike the current proposal), and would have gone into effect on December 1, 2016. On November 22, 2016 — nine days before the rule’s implementation — a District Court judge in Texas granted a preliminary injunction to a group of states and business organizations which sued to block the new overtime rule from taking effect. After a trial, the Texas court ruled in favor of the plaintiffs, striking down the overtime rule.

As an employee, it is important to know your worker classification because that determines whether you are eligible to earn overtime. If you believe your employer has deliberately misclassified you in an effort to deny you overtime eligibility, contact an experienced New York Employment Lawyer. Steven Mitchell Sack, The Employee’s Lawyer, has handled thousands of employment cases and may be able to help you address your concerns and achieve justice. For more information or to schedule a consultation, call (917) 371-8000 or fill out our contact form.

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