DOL Issues Final Rule Expanding Overtime Protections

As PSHRA reported earlier in April, the U.S. Office of Management and Budget (OMB) completed its review of the Department of Labor’s (DOL) proposed final overtime rule, clearing the way for the rule to be issued any day.

That day has come, as the Biden administration just announced the final rule, which updates overtime exemption thresholds under the Fair Labor Standards Act (FLSA). The new rule expands overtime protections for millions of the nation’s lower-paid salaried workers by increasing the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements, according to a DOL statement.

Effective July 1, 2024, that salary threshold will increase to the equivalent of an annual salary of $43,888, jumping to $58,656 on Jan. 1, 2025. Beginning July 1, 2027, the salary threshold will update every three years, by applying up-to-date wage data to determine new salary levels, the DOL noted in a press release outlining the final rule’s key stipulations. For example, the agency says the final rule will:

⃰ Expand overtime protections to lower-paid salaried workers

⃰ Give more workers pay or valuable time back with their family

⃰ Provide for regular updates to ensure predictability, by establishing regular updates to the salary thresholds every three years to reflect changes in earning, protecting future erosion of overtime protections so that they do not become less effective over time

“The Department of Labor is ensuring that lower-paid salaried workers receive their hard-earned pay or get much-deserved time back with their families,” said Wage and Hour Administrator Jessica Looman, in a statement. “This rule establishes clear, predictable guidance for employers on how to pay employees for overtime hours and provides more economic security to the millions of people working long hours without overtime pay.”

The updated overtime rule could still have legal hurdles to overcome, however, as Reuters reported in the wake of the DOL’s announcement.

“The new rule is likely to face legal challenges arguing that, like the Obama administration rule, it violates federal wage law by including many lower-paid supervisors and professionals who typically would not be eligible for overtime,” wrote Reuters’ Daniel Wiessner, adding that some major business groups had urged the DOL to hold off on making changes to overtime pay regulations, in light of current economic conditions.

“This rule … comes as many entrepreneurs continue to struggle in today’s unpredictable regulatory climate,” said Michael Layman, International Franchise Association senior vice president, in a statement, “grappling with lingering inflation, labor challenges and high costs of goods.”