The White House Office of Information and Regulatory Affairs (OIRA) received a proposal Wednesday from the Department of Labor’s (DOL’s) Wage and Hour Division (WHD) to expand overtime protections to workers.
Under the Fair Labor Standards Act, workers are exempt from overtime pay if they meet a three-part test:
- They are salaried.
- They make more than a certain amount per year.
- And they work in a “bona fide executive, administrative, or professional capacity.”
The Trump administration raised the salary threshold piece of that test–below which workers qualify for time-and-a-half overtime pay when they work more than 40 hours in a week—to $35,568. The Biden administration is also expected to raise the salary threshold of the test, which would result in higher payroll costs for certain employers. As a result, some salaried positions could be restructured as hourly positions to reduce incurred costs.
The proposal’s details will not be publicly available until it receives approval from OIRA, which is tasked with reviewing drafts of proposed and final regulations.
However, the proposed rule could face legal challenges in federal court. When the Obama administration attempted to raise the salary threshold to $47,000, a U.S. district court found the regulation to be invalid. In 2022, a Texas-based fast-food chain operator sued the DOL over the Trump-era rule. The pending Mayfield case has not yet been moved forward to trial.
NCA met with the DOL Wage and Hour Division last year to discuss our concerns with the overtime threshold as it relates to seasonal businesses and employees who earn commissions. NCA will file comments on the proposed rule once the details are released.
Contact NCA President & CEO Joe Trauger at [email protected] if you have any questions or comments.