The Department of Labor (DOL) recently released a proposed rule that would extend overtime pay protections to more salaried workers. As the landscape of employment law evolves, understanding these changes is essential for both employees and employers to protect their rights and responsibilities.
Current FLSA Standards
Under the current Fair Labor Standards Act (FLSA) regulations, white-collar workers in executive, administrative, professional, and certain other roles are exempt from overtime pay if they earn a salary of at least $684 per week or roughly $35,600 annually.
DOL Proposed Overtime Rule Change
The DOL has offered a proposed rule to raise this salary threshold, potentially extending overtime protections to a larger pool of employees. The proposed rule would increase the salary threshold for overtime exemption to $1,059 per week or $55,068 annually. This change could extend overtime protections to an estimated 3.6 million U.S. workers.
Currently, the proposed rule is in the notice and comment period, which typically lasts 60 days but can be extended, particularly for far-reaching regulations like this one. If the proposal becomes law, it won’t take effect until 2024 at the earliest.
The 35th Percentile
An important aspect of the proposed rule has garnered little attention: the DOL’s plan to set the salary threshold at the 35th percentile of full-time salaried workers’ weekly earnings in the lowest-wage census region, currently the U.S. South. This means that as the 35th percentile of weekly earnings changes, so, too, will the salary threshold until it becomes law, if ever. The DOL has projected that by the fourth quarter of 2023, the 35th percentile will increase, raising the salary threshold to $59,285 annually. If the comment period extends into 2024, the threshold could exceed $60,000.
This proposed change has sparked controversy, with potential pushback expected from restaurant associations and other low-margin industries. Both employees and employers need to stay updated on these developments to understand their rights and responsibilities under the changing regulations.
Implications for Workers and Next Steps
For workers, the proposed rule change has significant implications. It could mean increased earnings for those currently exempt from overtime pay but who fall within the proposed salary threshold. Such employees would be entitled to time-and-a-half pay for any hours worked beyond the standard 40-hour workweek, potentially resulting in significant wage increases.
However, the proposal’s impact is not solely financial. It also brings greater awareness about the importance of work-life balance and the need to limit excessive hours that can lead to overwork.
As a worker, staying informed is crucial. Regularly checking updates from the DOL or reliable news sources can help you understand whether and how these changes might affect you. If the rule changes, check your current salary against the new threshold to see if you’re entitled to overtime pay. This rule change isn’t guaranteed to become law, and, as we’ve noted, business-friendly organizations are expected to push back with substantial force.
Take Action With Sommers Schwartz
The proposed rule change to extend overtime pay protections is undeniably complex but is an issue we must all watch closely. Should the proposed changes become law, they will revolutionize how many Americans work and are compensated for their time. As a dedicated and experienced wage-and-hour law firm, Sommers Schwartz is committed to empowering you to navigate these proposed changes.
Reach out to the Wage-and Hour team at Sommers Schwartz for a consultation, and let us help you navigate the complexities of this proposed rule change. You are not alone in this journey, and we can help you effectively adapt to the changing landscape of employment law.
Jesse Young
Jesse Young represents clients in serious employment disputes, such as severance negotiations, discrimination, retaliation, whistleblowing activity, employment contracts, terminations, and compliance. In addition, he has appeared in hundreds of wage-and-hour lawsuits and hundreds more arbitrations arising under the Fair Labor Standards Act and similar state laws.
