by Craig Brightup, The Brightup Group LLC
On March 7, the U.S. Dept. of Labor (DOL) released a proposed regulation to update the salary-level test for determining when a “white collar” employee is exempt from earning overtime. The Obama Administration issued a regulation in 2016 that would have doubled the salary level from $23,660/year ($455/week) to $47,476/ year ($913/week), but it was halted by a federal judge in a challenge led by the U.S. Chamber of Commerce on the basis that the threshold was so high it made the duties test no longer relevant and thus was beyond the statutory authority of the Secretary of Labor. That decision is currently on appeal in the 5th Circuit Court of Appeals while the Trump Administration proposes a more modest update to the overtime regulation, which was last adjusted in 2004.
The proposed rule raises the threshold to $35,308/year ($679/week) and, as advocated by business organizations, reverts to methodology used in the 2004 rule that focused on the 20th percentile of full-time wage earners in the lowest income region of the country (identified as the South) and the retail industry as the baseline. It also makes no changes to the duties tests and has no auto-update feature, both of which are key points for business as well. However, the regulation does seek comments on conducting regularly scheduled rulemakings to update the salary threshold.
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