U.S. Department of Labor Proposes Rule to Extend Overtime

Date: October 31, 2023

U.S. Department of Labor proposes a rule to extend overtime to workers making less than $55,068

The Department of Labor (DOL) recently announced a proposed rule to increase the overtime exemption threshold under the Fair Labor Standards Act (FLSA). The overtime rule dictates that employees must receive overtime pay of at least time and a half for hours worked over 40 in a workweek. NFIB sent a letter to the DOL opposing an effort to expand overtime eligibility as increasing the threshold would be disruptive and economically challenging for small businesses.

The current threshold is $35,568 annually, and under this proposed rule, employees making less than $1,059 per week or $55,068 annually would be eligible for overtime pay. The adjustment is expected to expand overtime eligibility to an estimated 3.6 million workers and is a significant increase – nearly 55% – from the current $35,568 per year set in 2019.

To be exempt from overtime pay under the proposal, workers will need to be paid a salary of at least $55,068 and also meet certain job duties for executiveadministrative, and professional employees. Workers with a salary below $55,068 will need to be paid overtime if they work more than 40 hours per week.

Employers with previously exempt employees will have to increase these workers’ salaries to this new level ($55,068/year) to keep the employees exempt or reclassify the employees as non-exempt hourly workers and pay overtime for hours worked over 40 hours per week. DOL also plans to increase the earnings thresholds every three years automatically.

DOL estimates that this rule will have the following Year 1 costs for small entities:

  • An average total cost of $4,323 per entity, with a range of total costs of $1,833-$146,781 per entity.
  • Average payroll increases of $2,638 per affected entity, with an estimated range of payroll cost increases of $768-$103,871.
  • Estimated costs per small entity in selected industries include construction ($4,028), retail trade ($5,210), food services and drinking places ($9,332), and nonprofit ($3,570).

NFIB will be submitting a comment letter to DOL that expresses our opposition to the proposed rule. Read NFIB’s statement on the proposal. We encourage your business to submit a personal comment directly to DOL sharing your concern. To comment use the link for the government portal here (click the blue comment button on the left side of the screen). Comments are due by 11:59 p.m. on Tuesday, Nov. 7, 2023.

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