Obama Lite: Trump Labor Department Proposes Its Own New Wage and Hour Employee Exemption Rules

In 2016, the Obama administration created shock waves with a new rule increasing the salary threshold to qualify for an exemption from the overtime and minimum wage requirements. The Obama administration’s rule would have increased the salary threshold for executive, administrative, and professional employees from $455 ($23,660 per year) to $913 per week ($47,476 per year). The effect of the Obama-era rule would have been to drastically reduce the number of employees eligible for “exempt” status under the wage and hour laws and increase the number of employees eligible to receive overtime pay. The United States Court of Appeals for the Fifth Circuit eventually put that rule change on hold.

On March 7, 2019, The Trump Labor Department took its own stab at the decades-old exempt employee salary threshold, among other things. In its “Notice of Proposed Rulemaking,” the DOL announced a proposal which it says would make “more than a million more American workers eligible for overtime.” The new proposal would increase the minimum salary required for most employees to qualify as exempt from the current $455 per week ($23,660 per year) to $679 per week ($35,308 per year). Although not as drastic an increase as in the 2016 rule change, the Trump administration states that it realigns the threshold at around the 20th percentile of earnings of full-time salaried workers in the lowest-wage census region (the South).

The 2019 proposal does several other things as well:

• Increases the total annual compensation requirement for “highly compensated employees” from the current $100,000 per year to $146,414 per year;
• Includes a “commitment” to “periodic review” to update the salary threshold (in lieu of the automatic updates proposed in 2016 by the Obama administration);
• Allows employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the salary level.

According to the DOL, the proposed changes would not affect overtime rules for certain specific job categories, such as police officers, firefighters, and certain non-management employees and production-line laborers.

Unlike the 2016 rules, in this proposal, the salary thresholds do not change automatically. For that reason, the 2019 changes are less likely open to legal challenge. The Obama-era rule changes were struck down in large part because the Court found that the automatic adjustment mechanism circumvented the legal rules requiring that changes go through a notice and public comment period before being implemented.

Once the proposed rule is published in the Federal Register, the public will have 60 days in which to comment. As a result of public comments, the final rule may ultimately differ somewhat from the proposal.

For more information or if you would like to make a public comment, contact SS+D’s Labor & Employment Practice Group at, in our Dayton office at 937.222.2052 or in our West Chester office at 513.644.8125.