July 31, 2023
By Barrie Charapp Beaty
Mahdavi Bacon Halfhill & Young, PLLC
bbeaty@mbhylaw.com
On August 30, the U.S. Department of Labor promulgated a rule revising the exemption from premium overtime for white collar employees.
The proposed rule seeks to raise the annual salary threshold from $35,568 to $55,068 for employees, who are exempt from overtime pay due to administrative, executive, professional, and outside sales professional exemptions pursuant to the Fair Labor Standards Act (FLSA). What does this proposed rule mean? For employees to be exempt from overtime pay for the administrative, executive, professional, and outside sales professional exemptions pursuant to the Fair Labor Standards Act (FLSA), the employee needs to earn no less than $55,068 a year, which equates to approximately $1,059 per week.
In addition to raising the threshold salary for administrative, executive, professional, and outside sales professional exemptions pursuant to the Fair Labor Standards Act (FLSA), the DOL proposes an increase of the annual salary requirements from $107,432 to $143,988 for the “highly compensated employee” exemption.
So this would mean employees who earn less than $143,988 could earn overtime.
Under the FLSA, an employee must meet the following requirements to be deemed exempt from overtime pay as a “highly compensated employee.”
- The employee’s annual salary must be $107,432 or more per year. Under the proposed rule, that annual salary requirement would increase to $143,988 or more per year.
- The employee’s job is mostly non-manual labor work or office work; and,
- The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.
The DOL estimates that in its first year of implementation, revising the exemption from premium overtime for white collar employees as proposed in this rule would yield approximately 3.6 million white collar employees with overtime pay who currently do not earn overtime because of the exemptions.
This proposed rule revising the exemption from premium overtime for white collar employees is not in effect yet. The FTC seeks comments on the rule prior to finalizing the rule. The proposed rule was filed in the Federal Register on September 8 with the public comment period ending on November 7, 2023. Anyone can file a comment online with the federal register.
We will keep you updated on any further developments.