UPDATE: This week, the United States Department of Labor’s Overtime Rule takes effect. The Rule restores and extends overtime protections for an estimated 3.6 million salaried workers.
On April 23, 2024, the United States Department of Labor (the “DOL”) announced its Final Rule (the “Rule”) to restore and extend overtime protections for approximately 3.6 million salaried-workers.
Per the DOL, the Rule ensures that more workers receive extra pay for working long hours. KingSpry’s Employment Law Chair, Avery E. Smith, Esq., details what DOL’s Rule means for employers, and what steps they should take prior to the Rule’s effective date.
The Current Rule
The federal overtime provisions are set forth in the Fair Labor Standards Act (“FSLA”), which requires that most employees who work more than forty (40) hours in a workweek be paid an overtime rate of at least time and one-half of their regular pay rate.
The current rule also guarantees overtime pay for salaried workers who earn less than $35,568 annually or $684 weekly. The proposed rule would greatly increase this threshold so that lower paid, salaried-workers have the right to overtime pay.
However, there are exemptions to the overtime rule. Section 13(a)(1) of the FLSA provides an exemption from minimum wage and overtime pay protections for bona fide executive, administrative, professional, and outside sales employees.
DOL’s Final Rule
The Rule will increase the number of workers eligible for overtime pay by raising the annual qualifying salary threshold from approximately $36,000 to $55,000. This threshold impacts workers that earn between $692 to $1,059/week and work more than 40 hours/week. According to DOL, the Rule achieves the following:
- Restores and extends overtime protections;
- Gives workers who are not exempt valuable time back;
- Prevents future erosion of overtime protections;
- Ensures greater predictability; and
- Restores overtime protections in U.S. Territories.
Effective Date
The Rule takes effect this Summer on July 1, 2024.
What Employers Need to Know
Employers must be proactive and consider the new thresholds now. Because these changes will impact payroll and financial operations in a few short months, employers should prepare a comprehensive compensation strategy now.
Additionally, employers must know that they are required to comply with their states’ salary thresholds, even if those thresholds are higher than the DOL’s.
