For two months last year, the proposal was made available for feedback and generated nearly 300,000 written comments. As with all NPRMs, the DOL is required to review and consider feedback ahead of implementing a final rule. At an event last month, Solicitor of Labor Patricia Smith revealed that the final rule would be published this July and would be enforceable after 60 days. If Congress were to attempt to block the measure through legislation, the president wields veto authority. President Obama directed the DOL to act on overtime back in 2014 and supports the new rules.
The current minimum salary for overtime exemption stands at $23,660—just below the poverty line for a family of four. Per DOL estimates, the new $50,440 minimum would extend overtime protection to an additional 5 million white collar workers. In 2015, only 8 percent of salaried employees were eligible for overtime—compared with 62 percent in 1975.
There are a number of ways your business can prepare. Reviewing compensation is a good place to start—employers should make it a priority to identify exempt employees earning between $23,660 and $50,440 annually, the current and proposed minimums for exemption. The next step would be to take stock of job responsibilities and determine whether employees’ duties are in line with their overtime status. From there, it becomes important to measure how many hours per week these employees spend working. This data can help determine if raising base compensation above the exemption minimum is more cost-effective than updating employee status.
Employers should also be mindful that overtime laws can vary on the state and municipal level. For example, California’s overtime law mandates that workers earning less than twice the state minimum wage cannot be classified as exempt. In any instance where federal and local overtime laws contradict, the law most generous to the employee prevails.
The DOL’s new overtime rules are set to make waves and will likely feature heavily in the press ahead of their July release. Until then, be sure you have a sound solution in place for time and attendance management. The Namely team will continue to monitor the new measures ahead of implementation.