The Department of Labor has proposed new overtime regulations, which may go into effect in January 2020. The following is a Top Five list of the substantive provisions.
- New salary threshold for EAP exempt status. The proposed regulations would increase the salary threshold for executive, administrative, and some professional exemptions from its current $455 a week ($23,660 per year) to $679 a week ($35,308 per year).
- Non-discretionary bonuses could be included in salaries. The DOL would permit employers to count non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level test ($353), provided that the bonuses are paid annually or more frequently.
- “Highly Compensated Employee” test. In 2004, the DOL introduced the concept of a “Highly Compensated Employee,” who would be considered exempt if he or she made a “high salary” and satisfied a less-demanding “duties test.” Using prior methodologies for determining the salary, the minimum salary level in January 2020 would be $147,414 per year.
- Adjusting salary levels in the future. The DOL proposes updating salary levels every four years but only through notice-and-comment rulemaking. The DOL has specifically asked for public comment regarding its updating proposal.
- Duties tests remain the same. The DOL does not propose making any changes to the duties tests applicable to these exemptions.
As you may recall, the Department of Labor sought to implement new overtime regulations in late 2016, but those changes were not implemented after the political climate changed. Just like in 2016, your company should begin preparing now for the new regulations to take effect in 2020 and you should simultaneously stay apprised of any changes or modification to the proposed new rules that may occur before implemented, if at all.
We will also stay apprised of the progress of the new regulations and if you have questions or comments, please let us know. As always, if we can put our experience to work for you, give us a call.
Jennifer, Will & Emily