The Obama-Era Overtime Rule Stalls

As we previously reported, a federal district judge’s invalidation of the Obama-era overtime rules – which proposed a sharp increase in the salary threshold for exempt employees, expanding overtime pay to millions of workers – did not doom the possibility of changes to the minimum salary requirements.  Last week, on October 30, the Department of Labor filed a notice of appeal of the decision.  The notice comes after the DOL started the rulemaking process to replace Obama’s Rule with a new rule increasing the current minimum salary level by about 50% (to around $33,000).  If this became effective, it would be a significant departure from the Obama-era Rule, which doubled the minimum salary level to $47,476.  The DOL is expected to issue the new proposed rule in the coming months.

For the time being, the federal salary level test remains at $455 weekly / $23,660 annual salary for the executive, administrative, and professional exemptions, as well as the $100,000 annual compensation threshold for the highly-compensated variant of these exemptions.

Although efforts to increase the salary basis test at the federal level have been slow to progress, some states have been quick to increase salary thresholds.  For example, in New York, the revised salary thresholds for the administrative and executive exemptions in 2018 will vary by region and employer size, ranging from $780 per week ($40,560 per year) for employers outside of Westchester, Nassau, and Suffolk counties, to $975 per week ($50,700 per year) for employers with more than 11 employees in the NYC metro area.  On the other coast, the revised salary threshold is $46,380 for California employers.  Both states’ regulations provide for annual increases.

State Minimum Wage Rules Rev Up

While the federal minimum wage has been frozen at $7.25 since July 2009, the cost of living has increased by over 11% since that time.  Again, in the face of federal inaction, many states and cities have stepped up and increased their minimum wages.

For example, in 2017, 20 states plus Washington, D.C. increased their minimum wages. New minimum wage rates for 2018 have been announced in Alaska, Florida, Maryland, Montana, New Jersey, Ohio, Oregon, and Washington, D.C., among others.  Local officials in Albuquerque and Bernalillo County, New Mexico; Chicago and Cook County, Illinois; Flagstaff, Arizona; Los Angeles County, Pasadena, San Francisco, and San Jose, California; Montgomery County, Maryland; Portland, Oregon; and Seattle and SeaTac, Washington also announced new rates.

Stay tuned as we provide updates on the DOL’s proposed rulemaking and contact your local Orrick Employment Law attorney to confirm that you are up to date on changes at the state level.