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Trump DOL May Soon Release Long-Awaited Overtime Rule Changes

The Department of Labor (“DOL”) is continuing to roll out a series of changes to wage and hour regulations that may affect how much employees must be paid. Back in November of 2018, the DOL eliminated the “80/20 Rule” for tipped employees. Recently, the DOL signaled it may soon release long-anticipated changes to the Fair Labor Standards Act (FLSA)’s “white collar” overtime exemptions.

On January 16, 2019, the DOL submitted a draft of its proposed changes to the white collar overtime exemptions to the Office of Management and Budget (OMB) for review. OMB review is traditionally the last stop before a new proposed rule is published. This long-awaited rule change will likely make more executive, administrative, professional, outside sales, and computer employees eligible for overtime compensation by raising the minimum salary at which employees in these positions would be exempt from overtime pay.

Currently, the white collar exemption provides a salary threshold of $23,660. Employees who qualify under one of the white collar exemption categories and meet or exceed the salary threshold requirement are generally exempt from overtime pay. Employees who are white collar but do not meet the salary threshold must often be paid overtime. The DOL first proposed amending the white-collar exemptions in 2016 during the Obama Administration. The Obama-era rule aimed to raise the overtime threshold salary to $47,476, a move that would have significantly increased the number of white collar employees who would be eligible for overtime pay.

After the release of the Obama-era rule in May of 2016, however, a group of 21 states filed a lawsuit over the proposal in a federal Texas court. The federal court temporarily enjoined the Obama-era rule, blocking its implementation for the remainder of the Obama administration. Once President Trump took office, the new Trump DOL dropped its defense of the Obama DOL proposal in federal court. However, the Trump DOL also expressed its intention to reexamine changes to the white collar exemption and likely raise the salary threshold.

The details of the Trump DOL’s proposed regulation are still unknown, but legal experts believe the salary threshold may be raised to at least $30,000. According to the Office of Information and Regulatory Affairs, the proposed rule is still pending review by the OMB.  Although there is no deadline for when OMB is required to finish its review, OMB typically completes its assessment within 90 days. 

Therefore, it is likely that OMB will finish its review sometime in March 2019. Once the OMB finishes its review, DOL will publish the proposed rule for public comment. During this period, which typically lasts between 60 and 90 days, the public has an opportunity to provide input on the proposed regulation.

Employers seeking to review their overtime policies in anticipation of the Trump DOL’s proposed changes to the white-collar exemption rule should consult with legal counsel to ensure continued compliance with all state and federal wage and hour laws.  

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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