written by: Kayla Russell
Last month, the U.S. Department of Labor (DOL) proposed a new overtime regulation that would increase the salary threshold that must be met for an employee to be exempt or not eligible to earn overtime under the Fair Labor Standards Act (FLSA). According to the DOL, the proposed rule would make 1.3 million workers newly eligible for overtime pay.
Currently under the Fair Labor Standards Act (FLSA), employers are not required to pay overtime for employees who meet the specific salary and duties tests. The employee must meet the minimum salary requirement (currently $455 per week) and the employee’s primary duties must meet certain criteria.
The proposed overtime regulation would increase the salary threshold from $23,660 per year ($455 per week) to $35,308 per year ($679 per week). Under the proposed rule, the annual compensation threshold for “highly compensated employees” will also increase from $100,000 to $147,414. In addition to the salary threshold increases, the proposed rule would allow employers to use nondiscretionary bonuses, incentive pay, and commissions, to satisfy up to 10 percent ($67.50) of the salary threshold. The DOL has not proposed any changes to the current duties test.
Employers have 60 days to submit comments to the DOL, with the final rule being published after the comments are considered.
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