From the National Restaurant Association on March 7, 2019
The Department of Labor (DOL) just released its rewrite of the Obama Administration’s overtime rule, which more than doubled the salary threshold from the current level of $23,660 to $47,476 per year. The DOL’s rewrite of the rule proposes a salary threshold of $35,308 per year.
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The Department of Labor’s revisions to the rule reflect a review process including a Request For Information and a nationwide series of listening sessions allowing the regulated community and stakeholders to offer input on this important federal regulation. The National Restaurant Association said it supports the department’s commonsense approach to salary increases and the absence of a provision for automatic adjustments.
A National Restaurant Association email to members said the association is continuing to review the proposed rule and will provide a more in-depth analysis in the days to come.
Click here for the full text of the proposed rule.
Update
From the National Restaurant Association, March 12, 2019
Below is a summary of the proposed rule’s key provisions:
• Raises the salary threshold to $35,308 per year ($679 per week) – an increase that is within the ballpark of Secretary Acosta’s previous public comments and congressional testimony he gave suggesting an increase “around $33,000 give or take.”
• Makes no changes to the duties test (another key determinant that helps identify individuals who are exempt). The National Restaurant Association argued against changes to the duties test stating that any attempt to artificially cap the amount of time that exempt managers can spend on nonexempt work would place significant administrative burdens on restaurant owners, increase labor costs, cause customer service to suffer and likely result in an increase in wage-and-hour litigation. It advised, for example, that mangers in the industry need to have a “hands-on” and “do whatever it takes” approach to ensure that operations run smoothly; and that managers should be able to lead, train, and inspire by example.
• Rejects regional variations in the salary level as too complex. Based on information received by our members, the National Restaurant Association argued that such a provision would make compliance more difficult for national employers.
• Allows employers to satisfy up to 10 percent of the $35,308 minimum salary requirement by the payment of nondiscretionary bonuses, incentives and commissions. The Obama 2016 rule required that the bonuses be paid at least quarterly. Under the new proposal, the bonuses can be paid annually or more frequently. The National Restaurant Association argued that bonuses are critical components of an employee’s total compensation package and should be counted toward meeting the salary threshold; and that employers value the ability to look at compensation in terms of total compensation and the regulation should support this flexibility.
• Does not include automatic increases to the salary level. Rather, the DOL is advising its intention to update every four years through notice and comment rulemaking, and they specifically asked for comment if that is an appropriate plan. The National Restaurant Association argued that when Congress authorized the department to issue regulations under the FLSA, Congress did not, either in 1938 or any time since then, grant the department the authority to index its salary test; therefore, the department cannot exceed its authority.
• Anticipates January 2020 as the effective date.
• Comments on the proposal are due 60 days after official publication in the Federal Register.
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