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US Dept. Labor Amends Salary Threshold for Overtime Rule

We have been following the Department of Labor’s Overtime Rule for several years now. This was the rule at the heart of Navarro v. Encino Motorcars, which held that service advisors were exempt from overtime pay under the “salesman exemption”. Following that judicial interpretation, the department itself released a long-awaited update at the end of September to clarify the salary threshold at which an employee of any department can be exempted from the rule’s overtime wage and hour requirements.

The salary threshold was moved from its old limit of $23,660 to a new limit of $35,568. The Employers Council estimates that this will make approximately 1 million more employees eligible for overtime pay. By contrast, you may remember that at the end of the Obama administration, the Department of Labor was attempting to raise the threshold to $47,476. That proposed threshold - later disapproved by Congress - would have expanded overtime to a vastly number larger of workers.

In this rulemaking by the Department, there were no substantial changes to duty requirements. In other words, no exemptions similar to the salesperson exemption were added to exclude certain types of workers. However, this rule also permits up to 10% of this salary threshold to be comprised of commission style payments, or guaranteed bonus payments. Finally, the salary level for highly compensated employees (also exempt from the overtime rule) was raised from $100,000/year to $107,432/ year.

If you have any questions relating to overtime eligibility pay, please contact Matthew Groves at matthew.groves@colorado.auto or at 303-282-1449.

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