Proposed Overtime Salary Threshold Increase

The U.S. Department of Labor (DOL) unveiled a proposed rule last week that would reshape overtime pay thresholds. The rule, officially titled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” includes a proposed increase in the overtime salary threshold from $35,568 per year to $55,068 per year. The salary threshold was last updated in 2019.

The Fair Labor Standards Act, (FLSA) which was enacted in 1938 to safeguard workers’ rights, provides the authority for the increased threshold. Among the FLSA’s original provisions was the establishment of a federal minimum wage – currently set at $7.25 per hour – and the requirement that most employees receive overtime pay at a rate of one and a half times their regular hourly wage for hours worked beyond 40 hours in a workweek.

However, FLSA includes exemptions for certain categories of workers, allowing them to be excluded from overtime pay. One such exemption, detailed under Section (13)(a)(1), pertains to the “white-collar” workers – often referred to as EAP (Executive, Administrative, Professional) employees. To qualify for this exemption, employees must generally meet specific “duties” tests related to their job responsibilities, receive a fixed salary, and meet a salary threshold, as defined by DOL. The statute provides DOL the authority to define and limit the terms of the exemption which provides the basis for the proposed rule.

To learn more about the impact of this proposed rule, register for ANCOR’s members only briefing.