New US Overtime Rule Proposal Would Raise Salary Threshold to $35k

New US Overtime Rule Proposal Would Raise Salary Threshold to $35k

The US Department of Labor unveiled its new proposal for updating overtime regulations last Thursday, offering a version of the rule that would expand overtime eligibility to more employees, but millions fewer than the one the Obama administration attempted to enact in 2016. The proposed rule raises the salary threshold at which executive, administrative, or professional employees become exempt from overtime requirements from $23,660 to $35,308: higher than many businesses expected but a far cry from the $913 per week, or $47,476 per year, set by the previous administration, Proskauer attorney Allan Bloom notes in a blog post summarizing the finer points of the proposal. Up to 10 percent of that minimum can be satisfied through non-discretionary bonuses, incentives, or commissions, or through “catch-up” payments made at the end of the year, which effectively reduces the weekly minimum further.

Another exemption for highly compensated employees would increase from $100,000 to $147,414, which is actually higher than the Obama administration’s threshold of $134,004. The new proposed figure equates to the 90th percentile of full-time salaried workers nationally, projected forward to 2020. Employees are exempt from overtime if they meet this higher level of compensation as long as they are primarily engaged in office work and regularly perform at least one of the duties of an executive, administrative or professional employee. If the proposed rule comes into force as written, employers of workers who are no longer exempt based on their level of compensation will have to decide whether to pay them overtime or bump their salaries up over the threshold. “Paying overtime on $125,000 per year is a huge economic burden, but it still may be less expensive than going to the new level,” Seyfarth Shaw attorney Alexander Passantino tells Lisa Nagele-Piazza at SHRM.

One feature of the Obama-era rule, subsequently struck down by a federal judge in 2017 before coming into effect, to which employers objected was its scheme for automatically increasing the threshold every three years based on inflation. This was intended to ensure that lack of legislative or regulatory action did not result in an outdated minimum: The threshold had not been updated since 2004, which was the first change since 1975. The new proposal does not include automatic increases. Instead, the notice of proposed rule-making expresses the department’s “intention to propose updates to the earnings thresholds every four years. This would provide clarity and help workers and employers by having a regular and orderly process for future changes.”

The new proposal also does not change the duties tests for overtime eligibility, Ryan Mick, an attorney with Dorsey & Whitney in Minneapolis, tells SHRM’s Allen Smith, which “would have required many employers to undertake a far more complex analysis to determine exempt status for many employees.” Still, it may be a good time for employers to make sure their exempt employees meet the existing criteria:

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Labor Department Announces $100M in Grants to Reskill Displaced Workers

Labor Department Announces $100M in Grants to Reskill Displaced Workers

The US Department of Labor announced last week that it was making available $100 million in “Trade and Economic Transition National Dislocated Worker Grants,” which will fund training and career services programs for workers affected by “major economic dislocations.” These grants will be disbursed to states, outlying areas, local workforce development boards, and other entities, by the department’s Employment and Training Administration, and are meant to address a variety of workforce challenges, including:

  • The economic and workforce impacts associated with job loss or employer/industrial reorganization due to trade or automation;
  • The loss, significant decline, or major structural change/reorganization of a primary or legacy industry, such as a manufacturing downturn due to technological advances, including impacts on the agricultural industry due to trade or other economic trends;
  • Other economic transition or stagnation that may disproportionately impact mature workers, putting them at risk for extended unemployment, lower wages, and underemployment.

Applications for grants are due by September 7, and the administration plans to begin awarding funds by September 30. It will continue to fund qualifying applications in the order they are received until all of the allocated funds are spent.

This is the first major initiative from the Trump administration focused on protecting the workforce from automation-related displacement. Treasury Secretary Steven Mnuchin took criticism last year when he downplayed the potential impact of automation on job loss, arguing that technological displacement would not be an issue for another 50 years or more.

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Fiduciary Rule Implementation Delayed for 60 Days

Fiduciary Rule Implementation Delayed for 60 Days

The “fiduciary rule”, an Obama-era regulation that would require financial advisors to act in their clients’ best interests when recommending retirement savings plans, has been targeted for removal or reform by US President Donald Trump’s administration since February, when Trump ordered the Department of Labor to review the rule and possibly revise or remove it. The deadline for compliance with the regulation was originally April 10, but the department proposed delaying it by 60 days last month to give it time to complete the review. On Wednesday, the department confirmed that the new compliance deadline will be June 9, according to CNBC:

Legal experts said the Labor Department’s announcement still keeps intact the core of the regulation. Among those are requirements that advisors charge no more than reasonable compensation, avoid misleading statements and act in your best interest when recommending investments. “The DOL is effectively regulating IRAs,” said Marcia Wagner, managing director at The Wagner Law Group in Boston. “This is the DOL saying that this isn’t up for debate.” …

Other portions of the regulation concerning specific written disclosures advisors and financial services firms must make to clients won’t take effect until Jan. 1, 2018, according to the DOL’s post on the Federal Register.

Some opponents of the rule had called for longer delays, and one expert tells Forbes’ Ashlea Ebeling that another postponement is not off the table:

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