DOL Issues Proposed Rulemaking to Expand FLSA Overtime Protections | Practical Law

DOL Issues Proposed Rulemaking to Expand FLSA Overtime Protections | Practical Law

The US Department of Labor (DOL) announced a proposed rule that would update the regulations governing which white collar employees are entitled to the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA). This proposal would extend these protections to nearly 5 million workers within the first year of its implementation by increasing the minimum compensation and salary levels required for exemption.

DOL Issues Proposed Rulemaking to Expand FLSA Overtime Protections

Practical Law Legal Update 8-616-9668 (Approx. 4 pages)

DOL Issues Proposed Rulemaking to Expand FLSA Overtime Protections

by Practical Law Labor & Employment
Law stated as of 24 Sep 2019 • USA (National/Federal)
The US Department of Labor (DOL) announced a proposed rule that would update the regulations governing which white collar employees are entitled to the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA). This proposal would extend these protections to nearly 5 million workers within the first year of its implementation by increasing the minimum compensation and salary levels required for exemption.
On June 30, 2015, the US DOL announced a proposed rule that would update the regulations governing which executive, administrative and professional employees are entitled to the minimum wage and overtime pay protections of the FLSA. This proposal would extend these protections to nearly 5 million workers within the first year of its implementation.
The primary focus of the Notice of Proposed Rulemaking (NPRM) is to update the minimum compensation and salary levels required for exemption from the FLSA's minimum wage and overtime pay requirements. In particular, the DOL proposes to:
  • Set the standard salary level at the 40th percentile for full-time salaried workers' weekly earnings. This proposal would raise the salary threshold from $455 per week (the equivalent of $23,600 per year) to about $970 per week ($50,440 per year) in 2016.
  • Raise the total annual compensation requirement for exempt highly compensated employees to $122,148 per year (the 90th percentile of weekly earnings of full-time salaried workers).
  • Automatically update the salary and compensation levels to ensure that they continue to be an effective test for exemption.
While not proposing specific regulatory changes on the following issues, the DOL:
  • Discusses the current duties test and:
    • solicits suggestions for additional occupation examples; and
    • requests comments on the current requirements.
  • Seeks comment on the possibility of including nondiscretionary bonuses to satisfy part of the standard salary requirement.
When the NPRM is published in the Federal Register, it will include a 60-day public comment period and minor formatting changes may be apparent. Once the proposed rule is published, interested parties are invited to submit written comments at www.regulations.gov.
The DOL has also published a fact sheet to explain key provisions of the proposed rule.
Update: On September 24, 2019, the DOL announced its final overtime rule, updating minimum salary and compensation levels for certain exemptions effective January 1, 2020. The agency also formally rescinded its 2016 final overtime rule, invalidated by a federal district court before its December 1, 2016 effective date. For more information on the DOL's 2016 final rule, subsequent litigation, and the 2019 rulemaking, see Practice Note, Latest Developments: DOL Rulemaking to Increase the Minimum Salary for White Collar Exemptions Under the FLSA.