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CEI Comments on New Labor Department Rule on Overtime Pay

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The Trump Labor Department put forward a new rule on overtime pay for salaried workers yesterday, that would increase the threshold for overtime eligibility from $23,660 to $35,000 for salaried employees. The new rule is a "vast improvement" over the defunct Obama-era rule, says CEI labor policy analyst Trey Kovacs:

"The Department of Labor's proposed overtime rule is vast improvement over the invalidated Obama-era regulation that increased the salary threshold far above historical norms. Since the 1940s, the salary threshold's purpose has been to merely screen out obviously non-exempt employees. A $35,000 salary threshold, which the DOL now proposes, is in line with past increases to salary threshold and is far closer to achieving the modest purpose of the test than the Obama overtime rule.

"The DOL also rejected two of the more toxic elements in the Obama rule. Employers will not have to deal with the administrative nightmare of multiple salary thresholds based on regional cost-of-living differences. In addition, the DOL will not include a provision to automatically increase the salary threshold every few years. The DOL's rejection of including automatic increases in its proposed rule is a prudent decision given that it is legally dubious and an idea that has been dismissed by past administrations.

"Once concern about the proposed rule is that the DOL has predetermined it will more frequently evaluate the salary threshold via the rulemaking process in order to increase the salary threshold. While there may be good reasons to update the overtime salary threshold more often, current statute already requires the DOL to submit a biennial report to Congress that evaluates and appraises the effects of minimum wage and overtime requirements and present recommendations to prevent curtailment of employment opportunities. One problem: it appears the DOL does not produce this report or regularly analyzes the impact of overtime requirements as required. If the DOL produced this report regularly, it would inform the agency as to when the purpose of the salary threshold had eroded and in need of updating."

Kovacs was a critic of the controversial Obama-era rule for going against what Congress intended, imposing an unrealistic burden on employers, and threatening jobs and opportunities for millions of workers.

Background:

CEI regulatory comments to the DOL

Labor Department Listens to Public Input on Overtime Rule

Labor Department Should Delay Overtime Rulemaking Pending Report