DOL’s $47,476 salary threshold too high
The 2016 overtime rule has been stopped in its tracks by a federal judge. That means Payroll no longer has to worry about a sudden, sharp increase in the number of employees needing to be paid time-and-a-half.
If you already had this number memorized — $47,476 – now you can forget it.
That was slated to become the minimum salary an executive, administrative or professional employee needed to be paid to be exempt from overtime.
But by setting the salary threshold so high, the Dept. of Labor (DOL) effectively made employees’ duties, functions and tasks irrelevant, the federal district court said.
The DOL didn’t have the authority under the Fair Labor Standards Act (FLSA) to do that.
Not only was the salary threshold unlawful, so was the provision that it should be automatically updated every three years, the court decided.
Looking back, looking forward
In November 2016, the court temporarily halted the rule when businesses and states filed lawsuits arguing the DOL had overstepped its bounds.
With an estimated 4.2 million workers on the fast track to becoming eligible for overtime on Dec. 1, 2016 employers breathed a sigh of relief that the final rule didn’t take effect. It has been wait-and-see since then.
In light of the Aug. 31, 2017, ruling you may wonder if you can settle back into the existing 2004 rule now.
That’s a “yes” and “no.”
Yes, in the duties test won’t be pushed into the shadows, as it would have been with the 2016 rule. So you should continue to work with HR to assess whether employees are exempt from FLSA based on what they do on a day-to-day basis.
And yes, because exempt employees must still be paid on a salary basis – e.g. watch out for deductions from wages for partial-day absences.
But, no, in regard to the minimum salary level. Although $47,476 was too high compared to the current $23,600, a more moderate increase — $33, 000 – could be on the table if new regs are proposed.
More info: tinyurl.com/overtime539
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