Department of Labor Proposes to Guarantee Overtime Pay to Workers Earning Less than $50,440 Annually
The Department of Labor issued proposed rules yesterday, to address President Obama’s 2014 Presidential Memorandum calling for an update to the overtime regulations, to “modernize and simplify” them while ensuring that the “intended overtime protections are fully implemented.”
The proposed rules would raise the threshold under which workers are guaranteed overtime, from the current $455 a week ($23,660 a year) to $970 a week ($50,440 a year) in 2016. Going forward, the DOL also proposes to automatically update the salary threshold based on inflation or a fixed percentile of earnings.
Notably, the proposal does not recommend changes to the “duties test” and the DOL reiterated its position that as salaries rise, a less robust examination of the employees’ duties is needed. It stopped short, however, of abandoning the duties test altogether, stating “[w]hile the salary provides an initial bright-line test for [overtime] exemption, application of a duties test is imperative to ensure that overtime-eligible employees are not swept into the exemption.” As part of the rule making process, the DOL is seeking comments on the following issues: