On March 22, 2019, DOL issued the new proposal, officially named Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, to update and revise the “white-collar” overtime exemption regulations. Among other changes, the Department is proposing to raise the current minimum salary for exemption from $23,660 to $35,308 per year. This level is lower than the threshold of $47,476 included in the Obama-era 2016 overtime final rule. If finalized, the proposal will replace the Obama administration 2016 final rule.
ABC’s comment letter states, “ABC is pleased the new proposed rule addresses many of the concerns that ABC expressed in comments in response to the Department’s 2017 Request for Information, including retaining in large part the 2004 standard salary methodology, adopting only one standard salary level and not imposing automatic indexing of the salary level test. However, we continue to have concerns regarding the data set being used to set the minimum salary, as well as the increase in the highly compensated salary level and the 10% rule for bonuses.” Read the comment letter to learn more about ABC’s position.
ABC hopes DOL will move swiftly to finalize this proposal.
Background on the Overtime Rules
On May 23, 2016, DOL issued the Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees final rule, which would have changed the federal exemptions to overtime pay under the Fair Labor Standards Act for “white collar” workers by doubling the current minimum salary level for exemption from $23,660 to $47,476 per year and automatically increasing it every three years. Throughout the rulemaking process, ABC was an active participant and urged the Department to withdraw the 2015 proposed rule.
Before the Obama administration 2016 final rule went into effect, it was vacated and permanently enjoined on a nationwide basis by the federal district court for the Eastern District of Texas in the case of Nevada v. Department of Labor.
On July 26, 2017, the Trump administration issued a Request for Information, which sought input on the 2016 final rule, specifically the minimum salary level required for exempt status. In its Sept. 25, 2017, comment letter on the RFI, ABC urged DOL to comply with the district court’s decision and immediately rescind the unlawful 2016 rule. Further, assuming that a new minimum salary standard would be adopted, ABC argued that it should be established by applying the same methodology that was used by the Department in 2004.
On March 22, 2019, DOL issued a new proposal to update and revise the “white-collar” overtime exemption regulations, which ABC submitted comments on May 21.
ABC will continue to provide status updates on the overtime final rule in Newsline.