DOL Announces Proposed Rule Extending Overtime Pay To Millions Of New Workers

On Wednesday, August 30, 2023, the U.S. Department of Labor announced a proposal intended to significantly increase the number of workers eligible for overtime compensation under the Fair Labor Standards Act (FLSA). Specifically, the DOL proposes to significantly increase the minimum salary necessary for workers to qualify as exempt executive, administrative, or professional employees for purposes of eligibility for overtime compensation. The DOL’s proposal would raise the minimum salary threshold to $1,059 per week or approximately $55,000 per year, from its current level of $684 per week ($35,568 annually). Should the new proposal take effect, employers would need to demonstrate both that an employee satisfies the exemption’s duties test and that the employee is compensated at a weekly rate of at least $1,059 ($55,000 annually) to qualify for exemption from overtime pay.

Among other items, the DOL proposal also would:

• Increase the annual compensation requirement for the “highly compensated employee” exemption from $107,432 to $143,988 annually.
• Automatically update salary thresholds every three years to reflect current earnings data.
• Restore overtime salary threshold requirements for workers in U.S. territories.

The DOL estimates that more than three million additional workers would be eligible for overtime pay under this new rule.

It is unclear at this time when the proposed rule might take effect. Once published in the Federal Register, the proposal would be open for public comment for 60 days before it could be published as a final rule. Undoubtedly, the proposal will be met with significant resistance and challenges from groups representing employers’ interests.

Please contact Mike Chesney or any member of Frantz Ward’s Labor and Employment Practice Group with any questions regarding the DOL’s proposal.