DOL Seeks to Update Overtime Rule

Last week, the Department of Labor (DOL) issued a new proposed overtime regulation. The regulation, which had been anticipated since last year, comes after the Obama Administration overtime rule was struck down in a Big “I”-supported lawsuit. The Big “I” was the only insurance trade association to join the lawsuit.

The Big “I” is currently reviewing the new draft, which is more limited in scope than the previous rule. If finalized, the proposal would increase the minimum salary level threshold for overtime exempt employees from $23,660 per year, or $455 per week, to $35,308 per year, or $679 per week. This amount is roughly an inflationary increase. The last time the threshold increased was 2004.

Also, nondiscretionary bonuses and incentive payments, including commissions, paid at least on an annual basis could satisfy up to 10% of the threshold. The previous rule sought to make this threshold $47,476—a much higher increase than warranted by inflation.

The previous rule also included a mechanism for automatically updating the overtime exempt employee salary threshold for inflation. The Big “I” opposed this as too burdensome for small businesses and beyond the statutory authority of the DOL. It was also a point of contention in the litigation.

The new draft rule does not include automatic updates, but the proposal seeks comment on conducting regularly scheduled rulemakings to update the salary threshold.

The DOL is now seeking public comment on the rule.

Jennifer Webb is Big “I” federal government affairs counsel.