WASHINGTON – On March 7, the U.S. Department of Labor (DOL) released its proposed update to the “white collar” exemption, also known as the overtime rule.
In 2016, the Obama Administration proposed and finalized dramatic changes to the overtime rule, which doubled the salary threshold under which all salaried employees must be paid overtime. That rule was ultimately invalidated by a federal court in Texas prior to implementation, necessitating this move by the current DOL.
The new proposal seeks to move the salary threshold from $455 per week ($23,660 annualized) to $679 per week ($35,308 annualized). This amount is slightly above adjusting the current salary threshold for inflation, roughly $33,000 annualized.
The new proposal is also dramatically lower than the Obama Administration’s 2016 final rule, which was $913 per week ($47,476 annualized). The salary threshold is also in line with the average salary of store managers in the convenience retailing industry, per NACS State of the Industry data. The DOL expects the new rule to take effect in January 2020.
Overall, the new DOL proposal is similar to comments NACS filed on behalf of the industry in 2016, and in 2017 in response to the department’s request for information. NACS argued that the department should use the same methodology when the rule was updated in 2004, that it should be reviewed and updated no more than every three years, and that updates should be subjected to standard notice and comment rulemaking. Under the new proposal, the DOL has reverted to the 2004 methodology with reviews subject to the formal notice and comment process.
The department is not proposing any changes to the so-called “duties tests,” which review an employee’s job responsibilities to determine if he/she is eligible for one of the four main exemptions under the rule. NACS also previously argued that those tests should remain as is.
NACS staff and counsel are reviewing the full proposal and will file new comments with the DOL in response to this proposal and can assist NACS members that would like to file their own comments. Comments will be due 60 days after the proposal is formally published in the Federal Register, which is expected to occur promptly.