The latest regulatory update for employers adds to a series of recent changes. The overtime rule, which underwent White House review weeks ago, is anticipated to be published and put into action very soon.
Under the Fair Labor Standards Act (FLSA), certain employees are exempt from overtime pay if they qualify as bona fide executive, administrative, professional, outside sales, or computer employees. To be exempt from overtime requirements, employees must meet specified salary thresholds, with the current minimum set at $35,568, among other criteria.
The upcoming increase scheduled for July 1 follows the wage-threshold adjustment process outlined in the 2019 rule, as explained by Jessica Looman, administrator of DOL’s Wage and Hour Division, during a recent press call.
This method bases adjustments on the 20th percentile of weekly earnings of full-time salaried workers in the lowest-wage U.S. Census region. In January 2025, the increase will utilize an updated methodology based on the 35th percentile.
Looman indicated that the initial increase in July 2024 is projected to impact around 1 million workers, while the subsequent increase in January 2025 is estimated to affect approximately 3 million workers.
Additionally, a separate overtime exemption applies to certain highly compensated employees. According to Patrick Oakford, deputy assistant secretary for policy at DOL, the minimum salary threshold for these employees will rise to $132,964 on July 1 and to $151,164 on January 1, 2025.
The department reviewed over 33,000 public comments on the proposed rule, including input from the Society for Human Resource Management (SHRM), which urged a delay in the final rule’s effective date until 2025. SHRM argued that a 60-day period between publication and the effective date is insufficient for employers to assess and comply with the rule.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” said Julie Su, acting secretary of labor. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable.”
Anticipation now turns to potential legal challenges in federal courts, where opposition to the rule is expected. While a judge for the U.S. District Court for the Western District of Texas previously rejected an attempt to overturn the 2019 rule, legal battles may continue. In Congress, a bill introduced by a Republican representative from Missouri seeks to block the new final rule, though it has not yet undergone committee review.
In the meantime, employer-side attorneys advise businesses to evaluate which positions will be affected by the updated thresholds and decide whether to convert impacted employees to hourly, nonexempt status with overtime pay or increase their salaries to surpass the threshold.
Source: Trucking Dive
