September 8, 2023

New DOL Rule Proposes Significant Changes to Overtime Salary Thresholds

The United States Department of Labor (DOL) has unveiled a new Notice of Proposed Rulemaking (NPRM) aimed at revising the salary thresholds for overtime exemptions, affecting various categories of employees under the Fair Labor Standards Act (FLSA). The proposed changes are as follows:

  1. Standard Salary Level Increase: The DOL proposes to raise the minimum salary threshold for the executive, administrative, and professional (EAP) exemptions from the current $684 to $1,059 per week, which translates to an annual increase from $35,568 to $55,068.
  2. Highly Compensated Employee Exemption: The Highly Compensated Employee (HCE) exemption, designed for certain well-compensated employees, would see its annual compensation requirement rise from $107,432 to $143,988.
  3. Regional Adjustments: The minimum salary threshold for EAP exemptions in American Samoa is slated to increase from $380 to $890 per week. However, the special minimum salary threshold for EAP exemptions in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands will be eliminated.
  4. Motion Picture Industry Rate: For EAP exempt employees in the motion picture producing industry, the base rate is set to increase from $1,043 to $1,617 per week.
  5. Automatic Updates: The proposed rule introduces a mechanism for automatic updates to earnings thresholds every three years, aiming to keep pace with wage trends.

Employers and stakeholders can provide feedback on the NPRM during a 60-day public comment period following its publication in the Federal Register. This rule change, once finalized, is expected to take effect in the spring of 2024. Employers are encouraged to proactively assess their pay systems to ensure compliance with the forthcoming regulations, potentially reclassifying employees as overtime-eligible and making necessary pay adjustments.