• August 30, 2023

By Allen Smith, J.D. | August 30, 2023

The Department of Labor (DOL) has proposed an increase to the Fair Labor Standards Act’s (FLSA’s) annual salary-level threshold to $55,068 from $35,568 for white-collar exemptions to overtime requirements. The department also is proposing automatic increases every three years to the overtime threshold.

The proposed rule would, according to the DOL, do the following:

• Restore and extend overtime protections to low-paid salaried workers. Many of these employees work side-by-side with hourly employees, doing the same tasks and often working over 40 hours a week.
• Automatically update the salary threshold every three years to reflect current earnings data.
• Restore overtime protections for U.S. territories. From 2004 until 2019, the department’s regulations ensured that for U.S. territories where the federal minimum wage was applicable, so too was the overtime salary threshold. The department’s proposed rule would return to that practice and ensure that workers in the U.S. territories subject to the federal minimum wage have the same overtime protections as other U.S. workers.

“We are committed to ensuring that all workers are paid fairly for their hard work,” said Principal Deputy Wage and Hour Division Administrator Jessica Looman. “For too long, many low-paid salaried workers have been denied overtime pay, even though they often work long hours and perform much of the same work as their hourly counterparts. This proposed rule would ensure that more workers receive extra pay when they work long hours. Public input is essential as we consider the needs of today’s workforce and industry demands, and we encourage continued stakeholder input during the public comment period.”

To be exempt from overtime under the FLSA’s “white collar” executive, administrative and professional exemptions, employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.

Prior to Jan 1. 2020, the salary threshold was $23,660. A blocked Obama-era rule would have doubled the threshold, but a federal judge held that the DOL exceeded its authority by raising the rate too high.

The Trump administration’s 2020 overtime rule raised the salary threshold to $35,568 per year. Adjusted for inflation, that amount today would be $42,594 annually.

Under the new rule, approximately 300,000 more manufacturing workers would be entitled to overtime pay, the Labor Department reports. A similar number of retail workers would be eligible, along with 180,000 hospitality and leisure workers, and 600,000 in the health care and social services sector. In total, overtime protections would be extended to approximately 3.6 million workers, according to the DOL.

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