DOL proposes new overtime rule salary threshold

OSCPA staff report  

A new salary overtime rule could impact millions of workers under a new proposal from the U.S. Department of Labor.  

On Aug. 30 the US Department of Labor, Wage and Hour Division, issued a notice of proposed rulemaking increasing the requirements for claiming overtime exemptions for Executive, Administrative and Professional employees, commonly referred to as the “White Collar Overtime Exemptions.” Currently, a white-collar employee can only be overtime-exempt (that is, paid on a flat salary basis without overtime) if the employee performs certain functions requiring judgment and discretion, and is paid at least $684 per week, approximately $35,600 annualized. 
 
The proposed regulation, if accepted as a revision to existing DOL Regulation 29 CFR Part 541 defining overtime eligibility, would increase the weekly required qualification threshold to $1,059 per week, or approximately $55,000 annualized, which could impact many Ohio employers. Somewhat recently, in 2019, the $684 per week requirement was raised from the prior requirement of $455 per week, thus representing an increase in the salary requirement by 130% in four years, if the proposed regulation is accepted.   

OSCPA has joined a national coalition of concerned employers urging the DOL to slow down the process to ensure impacted employers have more than the set 60-day comment period to compile data and respond appropriately. 

Separately, the American Society of Association Executives , of which OSCPA is a member, said this change could harm lower-level employees who would have to be reclassified from salaried professionals to hourly wage earners.  They believe this proposed reclassification could harm currently exempt junior and mid-level employees who would have to be reclassified from salaried professionals to hourly wage earners, due to the need for nonprofits to control overtime costs. Currently, many employers provide exempt employees with opportunities to participate in work experiences designed primarily to provide professional growth or to develop connections within their chosen field - something many employers will no longer be able to afford to do. Nonexempt employees often have more limited workplace flexibility options due to the need to track hours and limit overtime. 

To cushion some of these impacts, if the current salary level for exemption is raised, ASAE also calls for new regulations on the calculation of overtime compensation for nonprofit sector employees, including the option to calculate overtime on a biweekly basis.  This recognizes that nonprofit sector work is often variable, rather than fitting neatly into a Monday through Friday workweek. Under a biweekly calculation approach, nonprofit employers and employees would have the flexibility to balance workloads, offsetting longer workweeks with time off within a two-week period.