By Sharon Gold
On Thursday, March 7, 2019, the Department of Labor (“DOL”) released the much anticipated Notice of Proposed Rulemaking (“NPRM”) that significantly raises the minimum salary for exempt workers from $23,660 to $35,308. It is estimated that if this rule is finalized, more than a million workers will either become eligible for overtime pay or have their salaries raised to meet the minimum.
Employers will recall that in late 2016, a mere few days before the salary minimum was supposed to be raised to $47,476, a federal judge in Texas blocked the rule. Since that time, the DOL issued a Request for Information about the salary rule in 2017. More than 200,000 employers and individuals commented. In addition, the DOL had six in-person listening sessions in connection with the Request for Information. The DOL indicated it would release another proposed rule raising the salary in March of 2019.
One significant change from the prior attempt, other than a less drastic increase to the salary minimum, is the lack of an automatic periodic update to the salary. The prior rule that was struck down by a federal judge included automatic increases to the salary minimums, whereas the proposed rule only has a “commitment” to periodically review the threshold. In the current rule, any updates would still require additional notice and comment periods.
The current proposed rule intends to make the following changes:
- Raises the salary minimum for exempt workers from $23,660 to $35,308 yearly (or from $455 to $679 weekly)
- Raises the minimum for highly compensated individuals from $100,000 to $147,414
- Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid annually or more frequently to satisfy up to 10 percent of the standard salary level
The proposed rule does not make any changes to the job duties tests. In addition, there are no changes in overtime protections for police officers, fire fighters, paramedics, nurses, laborers, including non-management production line employees, and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers.
Employers and individuals have 60 days to comment from the date of publication in the Federal Register.
If the proposed increase is finalized after the comment period and a Final Rule is published, employers will have to raise the minimum salary for exempt workers to $35,308 or convert those workers to overtime eligible. More information is available at https://www.dol.gov/whd/overtime/FAQ2019.htm