Dept. of Labor Overtime Rule Update

Recently, the Department of Labor (DOL) requested information as it considers revising the Fair Labor Standards Act (FLSA) to update the exemption from minimum wage and overtime pay (of 1.5 times their regular pay rate) for “executive, administrative, professional, outside sales, and computer employees.” Earlier this summer, PIA National submitted comments in response to the request for information.

The existing rule defines exempt workers as those who are salaried employees working in “a bona fide executive, administrative, or professional capacity.”[1] Generally speaking, exempt employees were paid a salary that met a certain minimum level (the salary level test), and exempt workers performed duties that were of an executive, administrative, or professional nature. The current regulations have not changed since 2004.

The recent information request proposed a new rule that updates the standard salary level to reflect growth in wages and salaries and allows incentive payments, like commissions, to count toward up to 10 percent of the standard salary level. The DOL’s intention going forward is to propose updates to the salary threshold every four years.

This proposed rule would apply the 2004 methodology to current data (the DOL anticipates using 2018 data in the final rule). Allowing incentive payments like commissions to count toward up to 10 percent of the standard salary level is meant to modernize the rule to more accurately reflect current employment practices. The current proposed salary threshold of $679 per week keeps the 2004 methodology, while updating the level to reflect wage growth since 2004. PIA National made clear in our submitted comments that, while we appreciate the recognition of commissions as a source of income, we would have liked to see a greater percentage of—or even all—commission recognized as income for overtime purposes.

That said, PIA National was pleased to see DOL’s commitment to the ongoing reexamination of the efficacy of the overtime rule every four years and allowing for public comment during each reexamination. This will offer businesses and the DOL an opportunity to examine the way the rule is working and identify changes that may be needed before they turn into crises.

PIA National looks forward to continuing to work with DOL to update the overtime rule in a way that works for independent insurance agents and the rest of the nation’s workforce.


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