DOL Final Overtime Rule to Take Effect July 1

The Department of Labor released its final rule on overtime regulations under the Fair Labor Standards Act. The final rule increases the salary threshold for exemption from overtime pay and increases the total annual compensation requirement for overtime pay exemption for highly compensated employees. 

The final rule introduces key changes: 

• Standard salary threshold will increase starting July 1, 2024, to $844 per week ($43,888 per year) and will increase again on January 1, 2025, to $1,128 per week ($58,656 per year). 
  
  
• Highly compensated employees: The total annual compensation for the less stringent duties tests for highly compensated employees will increase to $132,964 on July 1, 2024, and will again on January 1, 2025, to $151,164.
  
  
• Automatic adjustments: Effective July 1, 2027, and every 3 years thereafter the salary thresholds will be updated by applying up-to-date wage data by the Bureau of Labor Statistics to determine new salary levels.

HRPA advocacy: The Association submitted comments in opposition to DOL’s proposed rule last year and endorsed the comments of the Partnership to Protect Workplace Opportunity Coalition. HRPA's government relations and policy teams actively participated in discussions with representatives from the Department of Labor and the White House Office of Information and Regulatory Affairs to express our concerns about the proposed rule.

Outlook: The new rule is expected to encounter legal opposition; a similar 2016 Obama-era rule was overturned on the ground that the DOL had exceeded its rule-making authority. Additionally, lawsuits may contend that the Labor Department did not adequately justify the substantial rise in the threshold occurring just four years following the previous adjustment. In the meantime, the business community will advocate extending the implementation date from July 1 to September 1. However, with the upcoming elections, it seems unlikely that the Biden administration will be inclined to delay the implementation date, as this issue will serve as a favorable talking point during the presidential campaign.