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March 11, 2019

Federal DOL proposes $35K overtime rule threshold

The federal salary threshold to receive mandatory overtime pay would increase from $455 a week to $679 a week under a proposal announced Thursday by the U.S. Department of Labor.

Thursday's announcement comes after months of speculation about what threshold level the Trump administration would propose instead of the $47,476 set by the Obama administration in 2016.

Soon after it was proposed, the Obama-era salary threshold was challenged in court by a coalition of 21 states and 55 business groups opposed to the new OT rules, saying it would force many state and local governments and small businesses to increase their employment costs. Former Gov. Paul LePage joined that lawsuit as an individual, when then-Attorney General Janet Mills declined to join the 21 states led by Nevada that challenged Obama's OT proposal.

A Texas federal judge struck down the Obama-era rule in August 2017, setting the stage for the Trump administration's Department of Labor to conduct its own review of the overtime threshold of $23,660 (or $455 per week) that hadn't been changed since 2004.

Under the new DOL proposal, $35,308 a year would be the salary threshold under which non-exempt employees would be required to receive overtime pay of 1.5 times their regular hour rate whenever they work more than 40 hours per week.

The new proposal would update the salary threshold using current wage data, projected to Jan. 1, 2020, according to the DOL's news release.

The result would boost the standard salary level from $455 to $679 per week (equivalent to $35,308 per year). By comparison, the Obama-era rule boosted the eligibility salary level to $913 per week.

The DOL said its proposal is based on public input from six in-person listening sessions held around the nation and more than 200,000 comments as part of a 2017 Request for Information.

"Our economy has more job openings than job seekers and more Americans are joining the labor force," said Labor Secretary Alexander Acosta. "At my confirmation hearings, I committed to an update of the 2004 overtime threshold, and today's proposal would bring common sense, consistency, and higher wages to working Americans."

"Commenters on the request for information and in-person sessions overwhelmingly agreed that the 2004 levels need to be updated," said Keith Sonderling, acting administrator for the department's wage and hour division.

According to the federal DOL, the proposed overtime rule maintains overtime protections for "police officers, firefighters, paramedics, nurses, and 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. The proposal does not call for automatic adjustments to the salary threshold."

More information about the proposed rule is available online here.

Comments about the proposed rule can be submitted electronically here, in the rulemaking docket RIN 1235-AA20. Once the rule is published in the Federal Register, the public will have 60 days to submit comments for those comments to be considered.

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