Trump Administration Issues Proposed Overtime Rule

On March 8, the Department of Labor issued a proposed rule to expand overtime eligibility, setting the threshold at $35,308 ($679 per week), compared to the current $23,660 ($455 per week). The proposed rule does not include automatic inflation adjustments as the Obama Administration rule required. The $35,308 threshold is close to Labor Secretary Alexander Acosta’s suggested overtime salary during his confirmation hearings, but well below the $47,500 that the Obama Administration would have imposed.

Late in December 2016, a U.S. District Court Judge for the Eastern District of Texas blocked the Obama Administration’s final overtime rule just days before it was to go into effect. PMAA welcomed this news because if the overtime rule were to be implemented, many employers would be faced with the possibility of reducing hours worked to 40 or less per work week. Management would also need to be diligent in watching hours worked for those employees who do not meet the salary requirements or would be legally obligated to pay overtime pay at a rate of 1-1/2 times their normal rate of pay for all hours worked over 40. Lastly, by increasing the threshold for overtime-eligible employees, companies could be forced to cut bonuses and benefits to boost the managers’ base salaries and lower hourly rates to compensate for the expense of paying salaried managers more.

The Small Business Legislative Council (SBLC), in which PMAA is a member, will be commenting on the proposed rule.