Human Resources News & Insights

Big news on DOL’s new overtime salary threshold

When it comes to complying with the DOL’s coming changes to the white collar overtime exemption regulations, employers will take any relief they can get. As a result, employers will likely embrace this suspected change to the regs. 

It appears the agency is backing off its original proposal to raise the salary threshold to $50,440 to qualify as exempt … at least a little.

The new threshold figure being kicked around by lawmakers is $47,000, according to reports by POLITICO and CNNMoney — with POLITICO’s labor and employment reporters Brian Mahoney and Marianne Levine citing “sources familiar with the Labor Department’s deliberations.”

Given the significant amount of criticizm heaped on the DOL’s proposed changes to the overtime exemption regs by employers and business groups, the decrease isn’t likely to come as a shock to many employers — although, it’s not as low as many would’ve liked to have seen it go.

Many critics felt the $50,440 proposed threshold was too big of a jump from the current $23,660 figure and that it failed to account for the specific financial environments of different industries and regions.

Example: Former DOL administrator-turned-attorney Tammy McCutchen told the House Subcommittee on Workforce Protections that a $50K threshold would have a disproportionate impact on states with a lower cost of living. In addition, she said the proposed salary threshold would far exceed the threshold established in high-cost-of-living states like California ($37,440) and New York ($34,124).

So it appears the DOL is willing to cave, at least a little.

Why $47,000?

One thing we don’t know yet, is exactly why the DOL’s considering moving the threshold to $47,000 — and we won’t until the DOL makes an official statement.

But we can hypothesize. Rather than setting the threshold to equal the 40th percentile of weekly earnings for full-time salaried workers (which is where the $50K number came from), it appears the DOL is settling for doubling the current threshold.

The current threshold of $23,660 annualizes out to $455 per week. Double that figure and you get $910 per week or $47,320, which could be characterized as “about $47,000.”

Still, we won’t have the final word on what the threshold will be until the DOL’s final overtime rule is published, which is expected to happen any day now.

Start prepping

Once the final rule is published, the DOL has indicated that it’ll take effect within 60 days. That doesn’t leave employers a lot of time to ramp up their compliance efforts.

So the safest approach is to start prepping now, and HR Morning has a checklist of best practices employers can start taking before the rule is published.

In addition, HR Morning will provide a full breakdown of the final rule along with top compliance strategies employers can use to gear up for enforcement.

So stay tuned.

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