Details Emerge on New Federal Overtime Proposal

From PA Chamber of Business & Industry

Numerous media outlets last week reported details on a new overtime eligibility rule expected to be proposed in the near future by the U.S. Department of Labor. 

The proposal would update the so-called “white collar exemption” rules, which dictate when an employee is exempt from overtime rules requiring time-and-a-half pay for any hours worked over 40 in a week.  Currently, an employee may fall under the white collar exemption if he or she earns less than $455 per week.  The proposed rule reportedly increases the “salary test” threshold to $679 per week.  The rule is also expected to stipulate that nondiscretionary bonuses and incentive payments, including commissions, may satisfy up to 10 percent of the salary test, provided such bonuses are paid annually or more frequently.

This proposal follows a 2016 rule proposed by the Obama Administration to increase the salary threshold to $913 per week and require regular increases thereafter.  This proposal was widely opposed by the employer community, which cited significant costs and the prospect of being forced to shift employees from earning a salary to ‘clock in, clock out’ hourly-based wages which reduce flexibility and may actually lead to less take home pay.  The U.S. Chamber of Commerce led a lawsuit opposing this rule, which was ultimately struck down by a federal court.