- The U.S. Department of Labor (DOL) has proposed to increase the salary threshold for overtime eligibility under the Fair Labor Standards Act (FLSA) to $35,308 a year ($455 to $679 per week), it announced Thursday. The proposal does not include automatic adjustments — an option previously under consideration.
- The announcement follows months of speculation in the employment community about an update to overtime requirements, as well as an ill-fated effort by the Obama administration to set an even higher salary threshold of $47,476.
- The proposed threshold, up from the current $23,660, would expand overtime eligibility to more than a million additional U.S. workers, according to the DOL announcement. Once published in the Federal Register, DOL's Notice of Proposed Rulemaking will be subject to a 60-day public comment period.
This is a long-awaited announcement for employers on an issue that has put compliance efforts on edge for several years. Both the National Restaurant Association and International Franchise Association support the new proposal, especially since it provides clarity to employers and will give employees access to more money, according to Nation's Restaurant News.
In 2016, a federal judge enjoined the Obama administration's overtime rule, sending shockwaves through HR departments that had adjusted their pay plans to bring employees over the new threshold. The appeals process bled into the change in administrations, until the Trump administration's DOL dropped its defense of the Obama-era rule. But the agency simultaneously asked the 5th U.S. Circuit Court of Appeals to approve the use of a lower threshold because the federal judge who issued the injunction had questioned the legality of any salary threshold whatsoever in his decision.
This foreshadowed a future update to the threshold, but today's announcement hasn't completely eased concerns about the Obama-era standard persisting in spite of the injunction. Tammy McCutchen, a former administrator of DOL's Wage and Hour Division, recently advised HR professionals to hang onto their 2016 overtime plans should the $47,476 threshold be floated again, especially with another presidential election soon to come in 2020.
The proposed $35,000 threshhold would leave out at least half of those who would've been eligible under the Obama-era rule, Heidi Shierholz, a former chief economist for DOL, previously told HR Dive.
This is a developing story.