Several clients and others have asked me recently about the anticipated new overtime rule and potential increase in the “white collar” exemption. The exemption has not been raised since 2004.
You will recall that in May 2016 the DOL issued a new rule. It got a lot of attention. That new rule more than doubled the required salary for white collar employees from the then current requirement of $23,660 per year to $47,476 per year. That rule also raised the required salary level for the “highly compensated” exemption, from $100,000 to $134,004, and established rules for automatic increases to those levels every three years. The rule was set to take effect on December 1, 2016. Days before it was to become effective, a federal district court enjoined the rule and subsequently held that the rule was invalid. The DOL initially appealed the decision, but eventually withdrew its appeals, asserting early in the Trump administration that it intended instead to issue a revised rule.
The DOL’s proposed new overtime rule has now made it to the Office of Information and Regulatory Affairs (OIRA), a division of the Office of Management and Budget. OIRA is responsible for reviewing significant regulations before publication. OIRA can take up to 90 days to review a regulation, and the period can be extended. Last fall, the DOL’s Wage and Hour Division announced that a new notice of proposed rulemaking is scheduled to be released by March 2019. We will have to see if the DOL holds to that schedule.
Based on previous comments from Secretary of Labor Alexander Acosta, the new proposed minimum salary level for the white collar exemptions is expected now to be in the low to mid $30,000 range – significantly lower than the minimum salary attempted in 2016. That level certainly has a better chance of holding up to a court challenge.
How, if at all, any potential further government shutdown will affect this schedule is anyone’s guess.