The U.S. Department of Labor on Sept. 24 issued a final overtime rule, updating the standard for overtime pay eligibility under the Fair Labor Standards Act (FLSA) and scaling back a rulemaking issued under the previous Administration. Notably, the Labor Department’s final overtime rule includes nearly all of NATSO’s recommendations for improving the rule.
Effective Jan. 1, 2020, the new rule raises the “standard salary level” from $455 to $684 per week (equivalent to $35,568 per year for a full-year worker) and reverts to the previous methodology used that focused on the 20th percentile of full-time wage earners in the lowest income region of the country (identified currently as the South) as well as the retail industry.
The final rule raises the total annual compensation level for “highly compensated employees” from $100,000 to $107,432 per year.
It also allows employers to use nondiscretionary bonuses and incentive payments, including commissions, that are paid at least annually to satisfy up to 10 percent of the standard salary level. While NATSO had hoped that DOL would not limit this compensation to just 10 percent of the salary level, NATSO is ultimately happy that the Department permitted the use of nondiscretionary bonuses and incentive payments to count toward the salary threshold.
The final overtime rule does not implement automatic updates to the salary threshold and does not make changes to the duties test, which NATSO had argued would harm the very employees it is designed to help.
In issuing the final rule, the Department of Labor specifically referenced NATSO’s comments on multiple occasions. Specifically, the agency cites NATSO’s concern with the 2016 final rule under the Obama Administration as well as NATSO’s support for maintaining the duties test and for allowing employers to count nondiscretionary bonuses and incentive payments to count toward the salary threshold.
NATSO in comments filed with the agency had argued that it anticipated significant adverse effects from the 2016 final rule, including not only increased compliance costs but decreased employee flexibility, reduced morale, and increased employee turnover.
NATSO urged the agency to refrain from changing the so-called "duties test" used to determine whether an employee holds an exempt or non-exempt status and opposed the establishment of multiple salary levels (depending on region, industry, etc.). NATSO also urged the agency not to automatically update the salary threshold, but rather review it sporadically to ensure it continues to serve its intended purpose. NATSO said unduly aggressive changes ultimately would harm businesses and employees by negatively altering hours worked and benefits as well as disrupting some of the most fundamental attributes of running a successful, efficient truckstop.
The Trump Administration reexamined the rules governing overtime pay after an effort by the Obama Administration was struck down by a federal court. The Obama Administration sought to increase the minimum salary required for overtime-exempt employees to $47,476 annually from $23,660. A federal judge in November 2016 issued a nationwide injunction against the DOL’s regulation; the same judge struck down the rule in August 2017.
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