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Proposed Overtime Rule Scheduled for October

The US Department of Labor (DOL) is now expected to release its proposed overtime rule in October, according to the spring regulatory agenda released on June 21st.

The proposed rule will provide guidance on how bona fide executive, administrative, and professional employees can be exempted from the minimum wage and overtime requirements laid out by the Fair Labor Standards Act (FLSA).

Changes That Might Be Coming

One priority for the DOL with this rule is to possibly increase the salary level from $35,568, though the amount of the increase is unknown. Some are advocating for levels to rise to the $47,476 enjoined by a court in 2016, while others want an even more substantial increase ranging from $62,000 to $80,000 or higher.

Another area the proposed rule might tackle is the implementation of a methodology that would increase salary levels without involving the DOL. One approach would be to use an automatic annual or periodic increase linked to an economic indicator, such as the consumer price index.

The DOL might also follow through on making changes to the duties test, which it has considered doing a few times in the past few years. The duties test is used to help determine whether an employee’s primary job duty is executive, professional, or administrative in nature and thus exempt from overtime requirements.

Some believe the administration intends to align federal rules with those in California. The California rules state that an employee qualifies for exemption if they spend more than 50% of their time on exempt duties where they usually exercise independent judgment and discretion. Many currently exempt employees could lose their status as a result.

Others think the DOL may also increase the restrictions for the administrative exemption, making it harder for employees to qualify. They warn that if any of these changes are enacted in any significant way, they will surely lead to litigation.

The DOL has not yet released any details on the proposed rule, so it is unclear what changes will be proposed. Monitoring the situation is advised, though experts warn that taking any decisions or action would be premature as the process is still in the early stages.

For more information on employee benefits, contact INSURICA today.

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