Overtime Rule on Standby Pending OMB Review

Looks like the U.S. Labor Department’s overtime rule is on thin ice.

The DOL yesterday sent a Request for Information related to the overtime rule to the Office of Management and Budget for its review. When published, the RFI offers the opportunity for the public to comment.

The rule, which increases the threshhold income for qualifying for overtime to $47,476, was to have gone into effect on December first of last year.

But there’s a new sheriff in town–President Trump, aided and abetted by his Labor Secretary Alexander Acosta, neither of whom have expressed much sympathy for the rule.

The rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) were to be effective on December 1, 2016. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

For my prior posts on the overtime rule, start here.

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