DOL to Revisit Salary Level in Overtime Rule
By: Anne Baggott
The Department of Labor is abandoning the minimum annual salary of $47,476 for employees to be exempt from overtime. In a brief to the Fifth Circuit Court of Appeals on June 30, 2017, DOL stated it is not defending the Obama administration’s 2016 final overtime rule that more than doubled the salary minimum to be exempt as a salaried employee. The brief stated DOL will be revisiting the rule through new rulemaking, a process that may take several years.
For about 75 years, the overtime rule of the Fair Labor Standards Act has allowed employers to classify employees as exempt from overtime if they are employed in a bona fide executive, administrative, or professional capacity using a three-part test: (1) be paid on a salary basis; (2) earn a specified salary; and (3) satisfy a duties test. The 2016 final rule raised the specified salary from $455/week to $913/week. Many employers found the rule unduly burdensome while workers’ advocates hailed the rule as necessary to protect the shrinking middle class. President Trump’s appointee to lead DOL, Secretary of Labor Alexander Acosta, stated in Senate confirmation hearings that the salary level should be more in line with inflation, somewhere around an annual salary of $33,000.
Until a new rule is in place, employees who are paid a minimum of $23,660 annually will continue to meet the minimum salary level to be exempt from overtime, but employers should continue to assess whether their employees are properly classified under the applicable duties test.