Federal regulators issue new proposal to hike salary threshold for overtime

The. U.S. Department of Labor has started the formal process to revise the salary threshold under which workers are eligible for overtime pay.

Unveiled March 7, the new proposal would raise the threshold from $455 to $679 per week, or $35,308 per year – significantly less than what had been proposed nearly three years ago. Workers making less would be eligible for overtime pay.

The current threshold is set at $455 per week or $23,660 annually. An earlier proposal, which was halted just days before it would have taken effect, would have doubled the threshold to $913 dollars per week or $47,476 annually.

“That would have been crushing for small businesses,” said Keely Jac Collins, an employment law attorney with King Spry Herman Freund & Faul in Bethlehem. “The increase was approved with no attention to the duties the employees were performing.”

Collins said the new proposal represents a compromise.

It’s an issue that employers in the Lehigh Valley should be paying attention to, she added, because it could have a significant impact, particularly on small businesses and startups. They are more likely to lack the resources to adapt to the rule change.

The labor department issued what is called a notice of proposed rulemaking, the first step in the department’s plan to raise the salary threshold for exempt employees, an issue that was first raised during the Obama administration. The initial proposal was stopped by a federal judge amid concerns that it was too big of a jump and put too much of a burden on employers and employees.

Deidre Kamber Todd, an Allentown attorney who sits on the board of the Lehigh Valley Society for Human Resources Management and the public policy committee of the Greater Lehigh Valley Chamber of Commerce, said there are such strong feelings on the matter among both employers and employees, that the new proposal is unlikely to make anyone happy.

Kamber Todd, said, however, that while employers won’t like it, she feels they’ll have more control than they think.

“They still retain some control,” she said. “They can simply not allow employees to work more than 40 hours per week. They can control how hours are tracked.”

She said there will be more work involved, but it will be more about the number of employees that need to be tracked, since the change is only to salary level and there is no reconsideration of what types of jobs qualify for overtime.

Collins said the positive aspect of the proposal from an employer’s standpoint is that the salary threshold is lower, so it won’t impact as many people, making it easier to implement.

Still, she said, there may be some reason for disappointment among employers, as there had been some talk of raising the rate to the equivalent of $33,000 per year and that’s what many who have been tracking the issue had been expecting.

While there are mixed feelings on the issue, most agree that some raise in the salary threshold is needed. The current threshold was set in 2004.

“We have a tremendous issue with the working poor in this country. Allowing more people to be eligible for overtime is a good thing,” Kamber Todd said.

Interested parties have 60 days to comment on the proposed threshold.

To comment go to www.regulations.gov and search for RIN 1235 AA20.

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