More US Employees Would Be Eligible for Overtime Pay Under Proposed Rule | Mercer

More US Employees Would Be Eligible for Overtime Pay Under Proposed Rule

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More US Employees Would Be Eligible for Overtime Pay Under Proposed Rule
More US Employees Would Be Eligible for Overtime Pay Under Proposed Rule
Calendar18 March 2019

The minimum wage and overtime exempt salary threshold for white-collar (executive, administrative, professional, outside sales and computer) employees would increase under a proposed Fair Labor Standards Act (FLSA) rule announced by the US Department of Labor.

Action Comes After Court Invalidated 2016 Rule Changes

To be exempt from overtime pay under the FLSA, employees must generally be paid on a salary basis at or above a specified minimum weekly level and meet certain requirements related to their primary duties. In 2017, a federal court invalidated 2016 regulatory changes that would have more than doubled the salary threshold set in 2004. The DOL’s proposal would rescind the 2016 rule and establish a more modest salary threshold. No changes to the duties test are proposed.

Proposal Highlights

The proposed rule would:

  • Boost the minimum salary threshold to $679 a week ($35,308 annually) — up from $455 a week ($23,660 annually).
  • Increase the highly compensated employee threshold to $147,414 annually — up from $100,000.
  • Require evaluation of the threshold every four years, with updates subject to notice-and-comment rulemaking.
  • Allow employers to count nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10% of the salary level.
  • Exclude from the new threshold employees in Puerto Rico, the Virgin Islands, Guam and the Commonwealth of the Northern Mariana Islands —the 2004 level of $455 a week will continue to apply for these employees.

Comments are invited until 60 days after publication of the proposed rule in the Federal Register.

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