New federal rule redefines overtime requirements

Under the U.S. Department of Labor's proposed overtime rules published in March:

• The standard salary level test threshold would increase from $455 per week to $679 per week ($35,308 annually);
• The highly compensated employee (HCE) total annual compensation level would increase from $100,000 to $147,414 for employees that meet the EAP capacity; and
• Nondiscretionary bonuses and incentive payments (including commissions) could satisfy up to 10% of the standard salary level test if the bonuses and payments are paid at least annually.

The deadline for public comments on the proposed rule has passed, and according to the website, nearly 60,000 separate comments were filed.

A number of employer-related organizations, including the U.S. Chamber of Commerce, identified concerns, but were generally supportive of the proposal.

Advocates urged the agency to retain the Obama administration's plan to require businesses pay overtime to workers earning less than $47,486, which a federal court struck down in 2016, while some small business owners told the DOL they will have trouble meeting even the proposed $35,308 salary level.

Employers
Common concerns expressed by employers included:

• Cost of living varies based on geographic location. Employers said that the standard salary level should be based on the geographic location of the employer, due to varying cost of living amounts from one region in the nation to another.
• Impact on nonprofit organizations. Employers in the non-profit sector expressed concern that due to their budgetary limits, their employees would be negatively impacted by the rule. One human resources director noted that the organization would be forced to “demote” salaried employees to hourly employees and adjust the rate of pay to their current salary level.
• Impact on part-time exempt employees. Some employers suggested that the DOL permit proration of the minimum salary level for part-time exempt workers. It was noted that many healthcare workers work on a part-time basis.

Small Employers
Unlike the challenge against the Obama-era proposed rule, the National Federation of Independent Business (NFIB), which represents 300,000 members comprised of small and independent business owners, is mostly in favor of the proposed rule, though NFIB would prefer the salary level threshold remain at $455 per week. NFIB also expressed doubt that the salary level test is consistent with 29 USC 213(a)(1) of the FLSA.

Public Commenters
Over 54,000 of the comments were the result of a public campaign against the proposed overtime rule. The comment template that was submitted to Regulations.gov supports the salary level threshold of $913 per week proposed in 2015 and opposes the proposed $679 per week level.


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