Department of Labor Proposed Rule Alert
September 5, 2023
If a new proposed DOL rule goes into effect, employers could find themselves on the hook for overtime pay for a significant portion of their workforce that was previously exempt. On August 30, 2023, the U.S. Department of Labor (DOL) announced a notice of proposed rulemaking that would guarantee overtime pay for most salaried workers earning less than $1,059 per week, or about $55,000 per year. The DOL estimates that under the proposed rule, 3.4 million workers could become newly entitled to overtime pay, which could impose $1.2 billion of direct costs on employers in the first year of the rule.
Under the proposed rule, certain salaried employees covered by the Fair Labor Standards Act (FLSA) would be exempt from minimum wage and overtime requirements if they earn a salary of over $55,000 per year and are employed in a bona fide executive, administrative, or professional capacity (EAP). The proposed rule raises the salary level from $35,568 per year in the current regulations. Under the rule as proposed, unless a qualifying employee is paid a salary of over $55,000 per year, the employee must be paid overtime for any hours worked in excess of 40 hours per workweek. The proposed rule would also increase the highly compensated employee total annual threshold from $107,432 to $143,988, meaning employees making less than the new higher amount who are not in an EAP role, but meet certain other criteria, would receive overtime pay. Finally, the proposed rule automatically increases the salary threshold every three years to reflect current wage data.
The employment law attorneys at Shuttleworth & Ingersoll will monitor the Department of Labor’s proposed rule and provide an update once the DOL determines the final rule.
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