In our practice as outside counsel for many small businesses and organizations, we are frequently asked about overtime exemption requirements for salaried employees. Recently, the Department of Labor issued proposed changes to the current regulations governing the exemption requirements. Some of the key points of the proposed changes are outlined below. Here at the Pearce Law Group, we will continue to monitor these changes to SC Labor law and provide updates as they occur.
The Fair Labor Standards Act and Proposed Changes to Overtime Pay Requirements
The Fair Labor Standards Act (FLSA) requires covered employees to pay certain employees who work more than 40 hours per week overtime pay. Most employees fall under the protection of FLSA, but there are some exceptions.
- For example, covered employers are not required to pay overtime to employees who receive a certain minimum salary for work that consists primarily of administrative, executive, or professional duties.
The last minimum salary level was set in 2004. In an attempt to recognize the changes and growth in wages since then, the Department of Labor issued a Notice of Proposed Rulemaking to the overtime regulations on March 7, 2019.
Who is eligible for overtime pay under the current regulations?
- Under the current regulations, covered employers must pay overtime to employees who work more than 40 hours per week and earn a salary below $455.00 per week (which equates to $23,660.00 annually).
- Employees who earn $455.00 per week or more may be eligible for overtime if the employee’s job duties primarily involve executive, administrative, or professional duties. (See current rule for all qualifications).
- Since 2004, the overtime regulations have recognized a reduced duties test for employee who are considered to be “highly compensated employees.”
- Under the current rules, employees who earn $100,000 or more annually may be eligible for overtime pay if they meet the highly compensated employees test.
What changes would be made under the proposed rule?
- Minimum earning threshold would increase so that employees will be eligible for overtime pay if they earn a salary below $670.00 per week (or $35,308.00 annually).
- As with the current rule, employees earning $670.00 or more may be eligible for overtime if they satisfy certain job duties, such as performing primarily executive, administrative, or professional duties.
- Besides raising the minimum earning threshold, the proposal also seeks to increase the total annual compensation for “highly compensated employees” from $100,000 to $147,414 annually.
- The proposal does not include any changes to the duties test for highly compensated employees.
- Additionally, the proposed rule does not include any changes to the overtime protections for police officers, firefighters, paramedics, nurses, laborers (including non-management production line employees), and non-management employees in maintenance, construction, and similar occupations, such as carpenters, electricians, and mechanics.
Public opinion on the proposed rule
- In forming its proposals, the Department of Labor received extensive public input form six in-person listening sessions held around the nation and more than 200,000 comments as part of a 2017 Request for Information.
- The Department is asking for additional public comment on the proposal for periodic review to update the salary threshold.
- If you are interested in submitting a comment about the proposed rule, you may do so electronically at www.regulations.gov.
- The Department recently submitted the proposed regulation to the Office of the Federal Register.
- Once the proposed rule is published in the Federal Register, the public may continue to submit comments for 60 days. Any additional comments after that point will not be considered.
More information about the proposed rule is available at www.dol.gov/whd/overtime2019.
Please note that none of the information above constitutes legal advice or should be construed as legal advice in any way. If you have any questions or concerns, please contact attorneys Chris Pearce or Charlie Jordan at The Pearce Law Group at 843-839-3210.