New Overtime Rule Soon to Make Its Appearance
Overview: The Department of Labor’s (DOL) proposal on a new federal overtime rule to determine the salary level for “white collar” exemptions — executive, administrative and professional employees — is expected in early 2019.
Details:
The DOL’s new overtime rule, intended to replace the rule announced late in the Obama administration and subsequently declared invalid by a federal court, is making its way to the Office of Information and Regulatory Affairs (OIRA), a division of the Office of Management and Budget (OMB), Bloomberg Law has reported. OIRA is responsible for reviewing significant regulations before publication to ensure agency compliance with the principles in Executive Order 12866, which include incorporating public comment, considering alternatives to the rulemaking, and analyzing both costs and benefits. OIRA can take up to 90 days to review a regulation, which can be extended, and there is no minimum period of review required. Last fall, the DOL’s Wage and Hour Division announced that a new notice of proposed rulemaking is scheduled to be released by March 2019.
In May 2016, the DOL issued its long-awaited overtime rule and, in doing so, more than doubled the required salary for the “white collar” exemptions (those employed in an executive, administrative or professional capacity) from $23,660 to $47,476. That rule also raised the required salary level for the “highly compensated” exemption, from $100,000 to $134,004, and established rules for automatic increases to those levels every three years. The rule was set to take effect on December 1, 2016, but days before it was to become effective, a federal district court in Texas enjoined the rule nationwide and subsequently held that the rule was invalid. The DOL initially appealed these decisions but eventually withdrew its appeals, asserting early in the Trump administration that it intended instead to issue a revised rule. Based on previous comments from Secretary of Labor, Alexander Acosta, the new proposed minimum salary level for the white collar exemptions is expected to be in the low $30,000 range – significantly lower than the minimum salary set forth in the now-defunct Obama-era rule.
Action Required: ADP will continue to monitor developments concerning the new overtime rule and will provide updates when available.
As always, please reach out to your dedicated service professional with questions.
*Produced in partnership with Jackson Lewis P.C.
This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.