In April of this year, the Biden administration announced a final rule updating overtime exemption thresholds under the Fair Labor Standards Act (FLSA).
According to the U.S. Department of Labor (DOL), 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.
That salary baseline will increase to the equivalent of an annual salary of $43,888, according to DOL. This change is set to take effect on July 1, 2024. (The threshold will increase again on Jan. 1, 2025, jumping to $58,656, and will update every three years, beginning on July 1, 2027.)
“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 announcing the final rule. “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.”
(DOL offers more information on the new overtime rule and its impact on this FAQ page.)
These new provisions figure to have “a significant impact” on public employers, according to Diane Juffras, a professor of public law and government at the University of North Carolina’s School of Government.
As Juffras recently noted, the new overtime rules turn many employees who are currently exempt from overtime into nonexempt employees who must be paid overtime.
These workers “will now need to be compensated at 1.5 times their regular rate of pay whenever they work more than 40 hours in a workweek,” Juffras wrote, adding that the new rule will not change any of the other FLSA provisions relating to overtime.
For example, public employers can continue to use compensatory time off or “comp time” in lieu of cash overtime, Juffras pointed out. In addition, public sector employers can still use the 28-day work cycle of the 207(k) exempt for paying overtime to law enforcement officers and firefighters.
Smaller employers with fewer than five law enforcement officers on the payroll in a given workweek, or fewer than five firefighters on the payroll in any workweek, continue to be exempt from paying, Juffras added, noting that the rules governing what time is compensable and what is not are still the same.
Writing for the National League of Cities (NCL) in May, Stephanie Martinez-Ruckman urged local governments to “identify employees who will now fall within this updated rule’s impact.”
Employees who are not exempt—those whose salaries do not meet the new threshold—will receive time-and-a-half pay when they work beyond 40 hours in a week, wrote Martinez-Ruckman, legislative director for human development at NCL.
“Even with a phased-in approach, the new rule has an implementation timeline that will put a strain on local government budgets that have not accounted for this increase in their annual budgeting process,” she said.
As others have pointed out, the new overtime rule could very well come up against legal obstacles.
“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.
Martinez-Ruckman echoed the belief that the updated rule would likely be contested in court, but encourages agencies to move forward as if the provisions will stand.
“While the outcome [of a legal challenge] is uncertain,” she wrote, “local governments should proceed with budgetary planning that assumes the final rule will be enforced.”
26 June 2024
Category
HR News Article
