Proposed Rule on Overtime Pay & White-Collar Exemption

Proposed Rule on Overtime Pay & White-Collar Exemption

The Department of Labor (DOL) recently issued a proposed rule to change the salary threshold for overtime eligibility.  Under the proposed rule, the DOL would raise the salary level for exemption from the minimum wage and overtime rules.  With the increase in the salary threshold, many more workers will be eligible for overtime pay.

Currently, employees with a salary level of $455 per week ($23,660 annually) are entitled to overtime for hours worked in excess of 40 in a workweek.  This salary level was set in 2004.

As many of you may recall, in 2016, the Obama administration proposed to raise the salary threshold for administrative, executive, and professional workers (“white-collar”) to $913 weekly ($47,476).  This proposal was met with outcry from the business community and litigation opposing the rule was filed immediately. A federal judge enjoined enforcement of the rule and the new administration vowed to address the issue.

Under the new proposed rule:

  • The salary threshold for the “white-collar exemptions” would increase to $679 per week ($35,308 annually).
  • The proposed rule does not mandate an automatic periodic adjustment to the salary threshold. The rule does, however, ask of for comments on how to accomplish a periodic adjustment.
  • There are no changes to the “duties” test for the white-collar exemptions.
  • The “highly compensated” employee’s salary threshold for exemption will raise from $100,000 to $141,414. These employees must still perform “office or non-manual work” as an executive, administrative, or professional employee.
  • The professional who were exempt from the salary test, like teachers and doctors, will remain exempt. Also, many non-professional positions, like nurses and police officers will remain exempt.

The proposed rule does not change the requirement that to determine exemption from the overtime rules, you need to examine the employee’s job duties and salary. 

Here is a link to the DOL summary:

Here is a link to the proposed rule:

As of last week, the notice of proposed rulemaking has not been published in the federal register. Comments on the proposed rule are due 60 days after publication in the federal register.