Labor Department Proposes New Federal Overtime Salary Threshold - HR Services | Audax HR Services

Labor Department Proposes New Federal Overtime Salary Threshold

Labor Department Proposes New Federal Overtime Salary Threshold

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.

“As we celebrate our 75th year, the cornerstone of our advocacy is modernization of workforce policies. Modernization must be reasonable, flexible and provide some certainty to HR professionals who oversee compliance of these rules,” said SHRM Chief of Staff and Head of Public Affairs Emily M. Dickens. “We are pleased to see that the proposed revisions have adopted a single standard that includes all 50 states and U.S. territories—except for American Samoa.”  

Dickens added, “We hope that following a robust public comment period, reasonableness, flexibility and certainty will guide other facets of the rule still needing improvement, including the salary threshold and automated updates. We’re excited to share the input of our members who can provide real-life examples of the needs of today’s workforce, including industry, geographic and small employer considerations.” 

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

“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.

On Wednesday, Sept. 6 at 4 p.m. ET, SHRM Government Affairs will host a first-word alert webcast on the proposed overtime rule. Register for this webcast today. More speaker details will be announced soon.

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.

This content was originally published here.


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