U.S. Department of Labor Announces Proposed Rule Change That Could Create New Class of Employees Eligible For Overtime Pay

On March 7, 2019, The U.S. Department of Labor announced its much awaited rule proposal regarding the eligibility of workers for overtime (https://www.dol.gov/whd/overtime2019/). The rule, if adopted, would increase the salary for exempt employees from $455 per week ($23,660 annually) to $679 per week ($35,308 annually). This rule would thus expand the class of employees, possibly by millions, who must be paid overtime if they work more than 40-hours per week. In New Jersey, while many employees in this salary range are already eligible for overtime pay, under the proposed rule employers could no longer claim that employees in this salary range are performing exempt administrative, executive, or professional duties. Furthermore, the proposed rule increases the total annual compensation requirement for “highly compensated employees” from $100,000 to $147,414 per year.

It seems unlikely that this rule will be adopted before late 2019, as the Department of Labor is asking for public comment on the proposed language for periodic review to update the salary threshold. As drafted, the proposed rule would require notice-and comment rulemaking before any update to the salary threshold. However, with the prospects of the new rule being adopted before the end of the calendar year, employers need to consider the legal and financial impacts this change may have on their businesses. If you have any questions or concerns regarding the rule proposal or its potential impacts, please feel free to contact our office.