The U.S. Department of Labor Proposes FLSA Changes to Give Millions of Workers Overtime Pay Protection
Client Alert
On August 30th, the U.S. Department of Labor (DOL) announced a Notice of Proposed Rulemaking (NPRM) proposing new regulations to guarantee overtime pay protection for millions of employees. Specifically, the NPRM proposes to change the federal Fair Labor Standards Act (FLSA) regulations with the following:
- Increase the salary threshold for bona fide executive, administrative, and professional (EAP) employees from $35,668 annually to $55,068,
- Increase the salary threshold for highly compensated employees (HCE) from $107,432 annually to $143,988,
- Apply these salary changes to U.S. territories and to employees in the motion picture industry, and
- Automatically update these earning thresholds every three years with current wage data.
The FLSA establishes minimum wage and overtime pay for employees in the private sector and in federal, state, and local governments. Non-exempt workers are guaranteed a federal minimum wage of $7.25 per hour and overtime pay of not less than one and one-half times their regular pay rate after 40 hours of work in a week.
Current FLSA regulations provide that EAP employees who earn a salary of $35,668 annually and perform duties within the EAP description (e.g., management, directing the work of others, performance of work requiring advanced knowledge, etc.) are exempt from FLSA protection. Similarly, current FLSA regulations exempt HCEs who earn a salary of $107,432.
EAP regulations were last updated in 2019. The DOL noted that keeping the earnings threshold up to date would benefit both workers and employers. Further, the DOL hopes FLSA thresholds reflect current economic conditions. In the first year, the DOL has estimated that 3.4 million workers exempt under current regulations will become newly entitled to overtime protection if the NPRM goes into effect.
The NPRM will be open for public comment for 60 days to consider comments before issuing a final rule. While it is uncertain when the NPRM could be finalized or whether it would be upheld by courts, employers should start to prepare for its potential issuance by re-considering exemptions in their current workforce.
Should you have any questions concerning the NPRM, please contact BMD Member John Childs at jnchilds@bmdllc.com or BMD Labor & Employment Partner and Co-Chair of its Labor & Employment Division, Bryan Meek, at bmeek@bmdllc.com.