The Department of Labor (DOL) announced on Thursday, March 7, 2019, the long-anticipated proposal to the salary-level threshold changes for white collar exemptions (overtime pay regulation).
As many of you may recall, in May of 2016, the DOL released the Final Rule on the overtime pay regulation with an increase from $23,660 to $47,476 for full-time exempt employees; however, this was blocked in November of 2016 by a U.S. District Court Judge, Amos Mazzant. The DOL did appeal the District Court’s decision, but a permanent injunction was issued in August of 2017. Employers have been holding their breath, expecting a new proposal to be released with the Trump Administration.
On Thursday, the DOL released the proposed salary-level threshold of $35,308 per year, or $679 per week, for white collar exemptions (overtime pay regulation). The proposal does not call for automatic adjustments to the salary or create salary levels based on the region of the country.
What does this mean for employers? To prepare for the implementation of a potential Final Rule, employers should begin reviewing and analyzing the positions held by exempt employees who are paid less than $679 per week.
First, the employer should review each exempt employee’s job description. In order for an exemption to apply, an employee’s specific job duties and earnings must meet all applicable FLSA requirements. Job titles never determine exempt status under the FLSA.
Second, a salary analysis should be completed to determine how many hours on average an employee works in a year or within a pay period. As a business owner or senior level manager, you should make this analysis: Is it more cost effective to pay the overtime amount of 1½ times the employee’s regular rate of pay for any time worked over forty (40) hours or to increase the employee’s wage to meet the new salary threshold of $35,308?
Finally, once the position description review and salary analysis have been completed, an employer has several options to remedy the situation and ensure compliance with the proposed regulation changes.
Wait or act now? While a Final Rule has not been released, it may be in the best interest of employers to start reviewing options to ensure compliance with the proposed regulation changes. The proposed regulation changes are subject to a public comment period, which allows time for the public to express its views and concerns regarding the actions of an administrative agency. These new proposed regulations are anticipated to take effect in the latter part of 2019.
For further questions, please contact HR Partners so we may assist you with determining the best course of action for your organization. HR Partners may also assist with the evaluation and determination of appropriate FLSA classifications for the various positions in your organization. Please call us today so we may ensure your organization is prepared and compliant with the new FLSA overtime pay regulations.