Employers Should Once Again Prepare for Changes in Overtime Exemption Threshold

Brandon S. Williams, Esquire brandonw@capozziadler.com

Since the end of the Obama Administration, there has been uncertainty in what would become of the overtime exemption levels found in the Federal Fair Labor Standards Act (FLSA).  The Obama Administration had proposed increasing the overtime exemption salary threshold, which would raise the salary requirements necessary for an employee to be designated as overtime exempt.  After legal challenges and delays, the Trump administration put the Obama-era proposals on hold.  Now, the Trump administration has signaled their intention to increase the threshold . . . but not by nearly as much as proposed by the previous administration.

In order to be designated as overtime exempt under the FLSA, employees must be paid a minimum salary AND meet certain tests regarding their job duties (e.g., executive, administrative, professional, outside sales, and computer employees).  The Obama administration had proposed to increase this salary threshold to $47,476/year ($913/week). Further proposed changes would have established automatic updates of the threshold. 

In March of 2019, the Trump administration announced its recommendations at much lower levels.  The new proposed rule would raise the salary threshold necessary to qualify as overtime exempt to $35,308 annually (or $679 per week).  The new rule does not include any automatic updates to the salary thresholds.

It is uncertain when the new rule will take effect, but it may be as soon as January of 2020.  Employers should begin reviewing the job descriptions, job duties, and compensation of exempt employees now in order to determine whether any exemption classifications may be subject to scrutiny under the anticipated salary levels.

Contact Brandon Williams at BrandonW@capozziadler.com or (717) 233 4101 about the changes in overtime exemption or with other employment related questions.