The Department of Labor Proposes a Much Needed Salary Increase for Employees Exempt from Overtime Pay
On August 30, 2023, the United States Department of Labor announced a much-needed proposed change in regulations under section 13(a)(1) of the Fair Labor Standards Act to increase the overtime pay requirements for all employees working in executive, administrative, and professional capacities who were previously exempt from receiving overtime pay. The new rule would guarantee overtime pay for salaried employees making less than $1,059 per week, which is equal to about $55,000 per year.
The new pay increase would mean nearly a 55% increase from the 2019 salary requirement passed by the Trump Era Department of Labor which set the no overtime threshold at $684 per week ($35,500 per year), and would expand overtime protections for roughly 3.9 million American workers.
“For over 80 years, a cornerstone of workers’ rights in this country is the right to a 40-hour workweek, the promise that you get to go home after 40 hours or you get higher pay for each hour that you spend laboring away from your loved ones,” said DOL Acting Secretary of the Julie Su.
If this rule becomes the law, employers will have to either (a) increase the salary of their full-time employees to ensure that they remain exempt; (b) redesignate a position as non-exempt and pay employees overtime; or (c) reevaluate employee salary structure and move employees from salaried to hourly positions.
Along with an overtime threshold increase, the proposal would update the salary threshold every three years to reflect changes in earning data. The increases would automatically be tied to the 35th percentile of weekly earnings for non-hourly full-time employees in the lowest-wage census region – currently the South.
Attorneys and legal observers on both sides expect challenges to the DOLs regulations.
In 2017 the Obama administration proposed a similar change which would increase the then $455 per week minimum pay requirement to $913 per year (or from $23,500 per year to $47,500 per year). However, a federal judge blocked the new regulations in December 2016 a week before they were initially meant to go into effect. A federal judge from Texas ultimately ended Obama’s overtime increase aspirations in 2017 when he ruled to strike down the regulation completely.
The DOL’s proposal is open for public comment for 60 days, all of which will be reviewed before the department publishes its final rule.
Hurwitz Law favors the increase because it is too often that we see employees making less than $40,000 a year who work incredibly long hours. We have even calculated that sometimes the total amount of hours, if paid straight time, would bring a salaried employee below the minimum wage. Hurwitz Law consistently files federal lawsuits against large companies to even the playing field for employees who are not paid for overtime but consistently being asked to work a huge amount of hours.
If you have any questions or concerns regarding your eligibility for overtime pay or any concerns regarding your wages, please contact [email protected].