Proposed Overtime Rule: What Employers Need to Know

The U.S. Department of Labor is shaking up the employment landscape with a proposed rule that’s set to benefit approximately 3.6 million salaried workers. This rule, proposed on August 30, 2023, seeks to expand overtime protections, ensuring overtime compensation for those who’ve been working long hours without extra pay. In this blog post, we’ll break down the key aspects of this proposed rule and how it might affect employers.  

The Proposed Overtime Rule 

The current salary threshold for overtime eligibility is $35,568. This proposed rule aims to raise this threshold significantly, with the goal of providing overtime pay to most salaried employees earning less than $1059 per week, roughly equivalent to $55,000 annually. 

The Department of Labor gathered input to inform this proposed rule, including twenty-seven listening sessions with over 2,000 participants. Here’s what the rule entails: 

  1. Expanding Protections:
    Extending overtime protections to low-paid salaried workers who often work alongside hourly employees but do not receive overtime pay due to current regulations. 

  2. Accurate Employee Classification:
    Identifying non-exempt executive, administrative, or professional employees more accurately to ensure they receive overtime compensation or more time off when working beyond forty hours a week.  

  3. Keeping Up with the Times:
    To prevent future erosion of overtime protections and to provide greater predictability, the rule proposes automatic updates to the salary threshold every three years based on current earnings data.  

  4. Territorial Fairness:
    Overtime protections for U.S. territories will be restored, aligning them with federal minimum wage regulations. This ensures that workers in these territories receive the same overtime protections as their counterparts in the mainland U.S. 

This proposed rule will undergo a sixty-day public comment period before finalization, with the Department of Labor considering all received comments.  

What This Means for Employers 

Now let’s talk about what employers can expect. With these changes on the horizon, there are some important considerations: 

  • Increased Labor Costs:
    Be prepared for potentially higher labor expenses as more salaried employees become eligible for overtime pay. 

  • Work Hour Monitoring:
    Accurate tracking of employee work hours will become crucial. You may need to implement stricter timekeeping practices to ensure compliance. 

  • Scheduling Adjustments:
    To manage costs, some employers may limit weekly hours to the standard forty, potentially necessitating the hiring of additional staff or redistributing workloads. 

  • Flexibility is Key:
    Offering flexible work arrangements, such as telecommuting options, can help employees manage their schedules and reduce the need for overtime. 

  • Salary Adjustments:
    To exempt employees close to the proposed threshold from overtime requirements, some employers may choose to increase their salaries.  

  • Stay Complaint:
    Remember, non-compliance with the impending overtime rules could lead to grievances and legal action

How BrownWinick Can Help 

Navigating these new regulatory waters can be a challenge, but you don’t have to go it alone. At BrownWinick, our attorneys stay current on new employment regulations and understand how they affect employers. We can assist with ongoing compliance and tailor business solutions to meet your unique needs. If you have any questions about your business or your employees, please contact me or your BrownWinick Employment & Labor attorney. Special thanks to summer associate Sarah Herz for her assistance with this blog.