Now that the new $35,000 per annum overtime rule has been proposed, the commentators have been commenting on the implications.  I have read these with great interest.  For example, Alexander Passantino, former DOL Wage Hour Division chief, stated that “it just struck me as funny that it’s within $5 per week of the exact midpoint between the $23,660 and the $47,476.  It is as close to the middle as you can get without making it totally in the middle.”

The figure is where it was expected to be by most commentators.  This is in spite of worker advocates urging that the number be set much higher.  Congressman Bobby Scott, D-Va., stated that although the new salary level provides overtime to some workers, it “would exclude millions … who would have benefited under the 2016 Obama administration rule.”

There are also no automatic updates or escalators.  In lieu of such increases, there will be potential increases every four years but there will first be a notice and comment period.  Mr. Passantino stated that the DOL was trying to walk a fine line between business and employee interests.  He stated that “I think the automatic update strikes me as an attempt to go down the middle again.  They’re going to get comments that say there should be automatic updates, and they’re going to get comments that say there shouldn’t be.  I can’t imagine there are going to be very many comments that say there shouldn’t be, but you should totally think about it every four years.”

What has surprised many observers is that the salary level for highly compensated employees, the HCE exemption, was raised higher than even the Obama proposal had set it.  The new level of $147,000 is almost $50,000 higher than the 2004 level ($100,000) and $13,000 more than the 2016 Obama proposal.  Lee Schreter, a wage-hour attorney, stated that “I think the biggest impact of the rule will not be the minimum salary. I think the place where the impact is going to be felt most and where I think you’re going to see some employer push back is on the increase in the highly compensated.”

The issue had come up early on whether there would be different salary levels for each white collar exemption — executive, administrative and professional.  There was also the possibility of effecting geographic/regional salary level. These possible modifications did not make it into the final proposal.

The Takeaway

Interesting tidbits…

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