Last Updated: February 21, 2019
On May 18, 2016, the U.S. Department of Labor (DOL) issued a final rule to update the regulations governing which employees are eligible for overtime pay. Today, employers are required to pay overtime for all employees earning $455 per week or $23,660 or less per year. Under the new rule, that salary threshold would increase and require businesses to pay overtime for all employees earning $913 a week (or $47,476 per year) or less. Significantly, for the first time in its history, DOL failed to consider salary levels in the retail marketplace when setting the final rule—in all previous rulemakings, DOL had reduced the national overtime threshold to account for average retail wages. The DOL also took the unprecedented step of setting the threshold to automatically update every three years using the same flawed methodology. The final rule was supposed to go into effect in December 2016 but was delayed by a court injunction and ultimately struck down entirely. Under the Trump Administration the DOL is reviewing its options for updating the rule.
Labor costs are already the highest single operating expense for convenience stores. While it is appropriate for the government to adjust the overtime salary threshold so it remains relevant in the current marketplace, it is inappropriate for the government to ignore industry and regional variations when establishing a threshold to exempt an employee from overtime. The overtime rule will disproportionately increase the labor costs of certain industries and certain geographic regions.
NACS is not opposed to adjusting the overtime threshold; however, NACS believes that the threshold must be established in a manner that is appropriate for the particular industry and geographic region in which the employee is working.