By Nick Goldstein, vice president of regulatory affairs & assistant general counsel, ARTBA
The U.S. Department of Labor (U.S. DOL) announced July 26 that it will review an Obama administration regulation changing how workers qualify for overtime pay. The regulation is on hold because of federal court litigation.
Currently, if a salaried employee earns more than $23,660 per year, they can be exempted from overtime pay if their primary responsibilities fall into certain categories, such as managerial and administrative duties. The Obama administration rule more than doubled the minimum yearly salary level for workers exempt from overtime pay to $47,476, before their specific duties can be examined for an exemption. The regulation also includes a mechanism to automatically adjust the salary threshold every three years based on the 40th percentile of wages in the lowest pay region of the U.S. Census.
If the rule is allowed to go forward, the first update will take place Jan. 1, 2020, with the new salary level announced 150 days prior. According to U.S. DOL estimates, more than 4 million additional workers will qualify for overtime once the new regulation is fully implemented. Responding to both the litigation and the Obama rule, the Trump administration is seeking additional information on exactly what sort of increase in the minimum requirements for overtime pay should be.
There have been a number of issues raised with the rule, specifically by the non-profit sector. In its report on regulatory reform priorities, ARTBA has warned that “the new minimum salary level for overtime exemption does not reflect geographic differences in average salary levels. In other words, the minimum salary in New York City is very likely to be much higher than it would be in Cheyenne, Wyoming. U.S. DOL should instead look to regional cost-of-living differences when setting the minimum salary threshold.”