Q:  I heard that there’s a new proposed increase to the overtime salary threshold (currently $23,660) being considered, is this true?

A:  I generally try to avoid discussing details of “proposed” legislation, because putting out information that may or may not materialize muddies the water.  But I think this time it’s worth it because we all could use a refresher on what happened.

To make a long story short, since 2004 the minimum salary threshold for exempt employees (those who do not get overtime) had been set at $23,660 and never been raised.

Right before leaving office, Obama’s Department of Labor -after several years of painstaking preparation- was set to raise the threshold to $47,476 effective Dec 1, 2016.  But a few days before it would take effect, a court in Texas issued an injunction.  It was a shocker.  Instead of fighting the injunction, the new administration’s DOL decided to simply revise the rule.  Fair enough.

Well it’s taken about two years but they now have a proposed new threshold and a few other changes.

For the record, although I agreed that $23,660  was a ridiculously low salary threshold for an exempt employee who is expected to work “as many hours as it takes” and needed to be raised, I thought the abrupt jump from 23k to 47k scheduled for Dec 2016, was excessively burdensome for employers.  It more than doubled!  I wrote about my concerns at the time.  Since then, I also think this administration dragged their feet over two years to revise the rule and come up with the latest proposal.  Having said that, I like some items on the proposal:

• An increase from $26,660 to $35,308  -more modest but less disruptive to businesses. (direct costs under proposed rule is an estimated $224 million less /yr than under the 2016 rule.)

• Allowing employers to use bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the salary level. –this is helpful and gives compensation flexibility to employers.

Some other items where I’m not impressed:

• No automatic adjustments to the salary threshold.  Onlya “commitment” to periodic review to update.  That’s what got us into this bind, lack of automatic adjustments gave us no adjustments since 2004.
• No date range when proposed changes will take effect.  No commitment to a date means they can fidget on the “proposed” stage for another 2 years.

Now we sit and wait again.

Copyright Eva Del Rio

Eva Del Rio is creator of HR Box™ – tools for small businesses and startups. Send questions to Eva@evadelrio.com