Proposed overtime rule moves forward

Proposed overtime rule moves forward

By on Mar 23, 2016 in Blog, Compensation Consulting, Compliance | 0 comments

The Department of Labor’s [DOL] proposal to update overtime regulations has been on the radar for many of today’s business leaders these past few months. Last week on March 14th, the DOL submitted its final changes on the proposed overtime regulations to the Office of Management and Budget [OMB].

What does this mean? Once the OMB finishes its review, the final rule will then be published in the Federal Register. The review may take anywhere from weeks to months before being finalized, and the updated rulings will have to take effect within 60 days of the publishing date.

As a reminder, the key provisions of the DOL’s proposed rule are:

  • Raising the threshold under which most salaried white collar workers are guaranteed overtime.  As proposed, this would raise the salary threshold from $455 a week [$23,660 a year] to a projected level of $970 a week [$50,440 a year] in 2016.
  • Increasing the total annual compensation requirement needed to exempt highly compensated employees [HCEs] to $122,148 annually.
  • Providing greater clarity for employers so they can determine more easily if they should be paying overtime compensation.
  • Automatically updating the salary threshold based on inflation or wage growth over time.

While the DOL states that the proposal will provide clarity to determine who should be receiving overtime pay, they have provided little commentary on the current duties test to qualify for exemption and have requested comments regarding the requirements from employers, workers, unions, and other stakeholders.

What should you do to get ready? Organizational Architecture can provide assistance to ensure your company is ready to take action once the proposed overtime ruling takes effect. To learn more, contact us on our website.

Also, check back with us on our blog for new updates regarding the proposed overtime ruling and other new postings on workforce strategy.