Payroll on Bloomberg Tax is built to get you to the right answer faster and more efficiently. Get all the payroll intelligence you need with Bloomberg Tax expert analysis, perspectives and...
The Labor Department may have underestimated the degree that the new federal overtime rule's salary thresholds would increase by 2020, and therefore more employees may become nonexempt from overtime requirements than the department expected, a nonprofit association said June 9.
Under the final overtime rule ( RIN 1235-AA11), issued May 18 and effective Dec. 1, the annual salary thresholds for exemption from the Fair Labor Standards Act's overtime requirements are to rise to $47,476 from $23,660 for executive, administrative and professional employees, and to $134,004 from $100,000 for highly compensated employees. The thresholds are to be adjusted every three years, starting Jan. 1, 2020. Adjustments to the standard salary threshold are to set the threshold at the 40th percentile of salaries for full-time salaried workers in the lowest-wage Census region. Adjustments to the threshold for highly compensated employees are to set the threshold at the 90th percentile of salaries for full-time salaried workers in the U.S. as a whole.
The department estimated that effective Jan. 1, 2020, the standard annual salary threshold is to be $51,168 and the annual salary threshold for highly compensated employees is to be $147,524, an information sheet showed. The estimates likely are lower than the thresholds that would be in effect Jan. 1, 2020, because employers may switch numerous salaried employees now exempt from overtime premiums to hourly status in response to the rule, Kerry Chou, senior practice leader at WorldatWork, said June 9 in a news release. The status switching would cause lower salaries to be removed from the sets of salaries used when computing adjustments and consequentially would cause the salaries at applicable percentiles to be higher, Chou said.
The standard annual salary threshold could be as high as $70,966, effective Jan. 1, 2020, which is 38.69 percent higher than the Labor Department's estimate of $51,168, because of employers switching salaried employees to hourly status in response to the rule and with increases to salaries to maintain exempt status not being counted as an offset, WorldatWork said in a chart.
Republicans in Congress concerned with potential effects of the final overtime rule have introduced measures to block or delay its implementation.
One bill, preemptively introduced March 17 in the Senate and House with identical language ( S. 2707 and H.R. 4773) would prevent the final rule from being enforced and would require the Labor Department's subsequent proposed overtime rule to not include automatic adjustments for inflation.
A resolution ( S.J. Res. 34) introduced June 7 in the Senate would, in conjunction with the passage of that language in the House and the Congressional Review Act, also would cause the rule to not be implemented.
President Barack Obama likely would veto these measures. However, under the Congressional Review Act, vetoing the resolution still would delay the rule's implementation for up to 30 congressional session days.To contact the reporter on this story: Howard Perlman in Washington at email@example.com. To contact the editor responsible for this story: Michael Trimarchi at firstname.lastname@example.org.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)