Labor Update: Labor Department Proposes New Overtime Salary Threshold

On August 30, the White House proposed a rule through the Department of Labor to extend overtime pay eligibility to an additional 3 million workers.

This move echoes an attempt by the Obama administration eight years prior to modify overtime eligibility criteria under the Fair Labor Standards Act (FLSA). The new proposal suggests that employers should pay eligible employees one-and-a-half times their standard rate for hours worked over 40 in a week. The proposed rule would raise the salary threshold for this from $35,568 (set by the Trump administration in 2019) to $55,000.

According to FLSA, employees are due overtime pay for work over 40 hours weekly unless they are deemed exempt. Exemptions are for employees with primary duties in the executive, administrative, or professional categories; those paid a set salary; and those earning above a certain salary threshold.

Both Obama and Trump administrations had issued regulations adjusting the salary exemption threshold. Many association employees usually qualify as exempt from overtime if they meet certain salary conditions, making this a pivotal topic for associations.

However, this proposed change may face legal obstacles, as seen with the Obama administration’s proposal that was blocked by a judge in Texas.

NARFA is keeping a close eye on this issue and will continue to update our members on the newly proposed rule.

While labor unions and certain advocacy groups have shown support, others like the Partnership to Protect Workplace Opportunity express concerns over rising labor costs that might adversely impact businesses. The proposal also suggests adjusting the salary threshold triennially based on income distributions.

The public has 60 days to comment on this proposal once it’s published in the Federal Register.