Overtime Proposal Released; Salary Basis Test to Double

By Cristeena Naser

The Department of Labor today released its long-awaited proposal to revise the requirements for employees to be exempt from overtime under the Fair Labor Standards Act. Those rules haven’t been updated since 2004.

The proposal would increase the salary basis test from the current level of $455 per week ($23,660) to $921/week ($47,892/year). This means that employees who make less than that amount must be paid overtime for time worked in excess of 40 hours/week regardless of what their duties are. The total annual compensation requirement for highly compensated employees would increase to $122,148. The proposal would also establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption. Although it was widely expected that the proposal would make changes to the duties tests, it does not appear to make such revisions. Rather, it requests comment on whether the tests should be changed.

In a blog post in the Huffington Post last night, President Obama touted the proposal as part of his top priority of strengthening the middle class by extending overtime protections to nearly 5 million workers in 2016. ABA is part of a coalition of employer groups – the Partnership to Protect Workplace Opportunity – that will respond to the proposal. Comments are due 60 days after publication in the Federal Register.

ABA will have a 90-minute briefing on the proposal and its implications for the banking industry at 2:00 p.m. Eastern Time on July 30. Registration for the program begins next week.