In August of 2023, the United States Department of Labor (“DOL”) announced its notice of proposed rulemaking to restore and extend overtime protections for approximately 3.6 million salaried-workers.
Per DOL, the passage of its proposed rule would ensure that more workers receive extra pay for working long hours. KingSpry’s Employment Law Chair, Avery E. Smith, Esq., details what DOL’s proposed rule means for employers, should it take effect this year.
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 Proposal
DOL’s proposed rule would 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 proposed rule would achieve the following:
- Restore and extend overtime protections;
- Give workers who are not exempt valuable time back;
- Prevent future erosion of overtime protections;
- Ensure greater predictability; and
- Restore overtime protections in U.S. Territories.
Expected Date of Passage
The comment period ended on November 7, 2023. Consensus amongst the legal community is that the proposed rule will take effect in the Summer of 2024.
What Employers Need to Know
Although the proposed rule is not final yet, employers should be proactive and consider the thresholds now. Because these changes may impact payroll and financial operations, employers should consider preparing a comprehensive and planned 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 DOL’s.
The Employment Law attorneys at KingSpry are a trusted resource for providing employment law advice, counsel, and representation. If your company has questions regarding DOL’s proposed rule or overtime pay requirements, KingSpry can help.