Labor Department Releases Proposed Overtime Rule

The U.S. Department of Labor this evening released its long-awaited rewrite of the Obama administration’s “overtime rule”—which was adopted in 2016 but never took effect due to a federal judge’s ruling later that year. Comments on the proposal will be due 60 days after publication in the Federal Register.

In the proposed rule, DOL set the salary level at which an employee could be exempted from federal overtime and minimum wage requirements at $679 per week, or $35,308 per year. These figures reflect the methodology adopted by the George W. Bush administration in 2004—which set the salary level at the 20th percentile of earnings of full-time salaried workers in the lowest-wage census region and in the retail sector—updated for projected 2020 salary data.

DOL’s proposed salary level reflects a significant reduction from the salary level adopted by the Obama administration, under which far more employees would have been treated as hourly earners had the 2016 rule gone into effect. DOL also proposed that the salary level be updated every four years through notice-and-comment rulemaking. DOL did not propose any changes to the “duties test.”

In previous comments, the American Bankers Association called on the DOL to adopt a single national salary level computed according to the 2004 methodology. ABA also opposed any automatic adjustments to the salary level and urged DOL not to make any changes to the duties test.