On August 30, 2023, the Department of Labor (DOL) released a Notice of Proposed Rulemaking that would amend the Fair Labor Standards Act to extend mandatory overtime pay to certain salaried workers. A similar rule proposed by the Obama administration to raise the overtime salary threshold to $47,000 was blocked in 2016 following separate legal challenges from business groups and nearly two dozen state officials.
The National Club Association plans to submit comments on the proposal to DOL, but do so, we need information from members about the possible impact these changes would have on employers and workers. Please provide your input by completing this short survey by Friday, Oct. 27. Background on the rule is below; please send questions or comments outside the survey to NCA President & CEO Joe Trauger.
Main Provisions
- The current overtime salary threshold would be raised from $684 a week or $35,568 per year, to $1,059 per week, or $55,000 per year. This so-called “white collar” exemption includes executive, administrative, professional and outside sales professionals.
- The salary threshold would be automatically updated every three years based on current earnings data.
- The earnings threshold for the highly compensated employee (HCE) exemption would be increased from $107,432 to $143,988.
National Club Association Outlook and Considerations
- The proposed rule from the DOL does not consider any geographic differences, such as the cost of living.
- Under the proposed rule, there will be no changes to how bonuses are counted toward the minimum-salary level requirement.
- Clubs have limited options to comply with the proposed rule:
- Increase the salary of employees who are just beneath the threshold to reestablish them back into exempt status.
- Adjust staffing levels to avoid excessive overtime payments. However, current labor shortages would make it increasingly challenging to recruit part-time workers necessary to fill any scheduling gaps.
Implementation of the proposed rule as written is unclear. The Biden administration has acknowledged they expect legal challenges to the proposed rule. It’s likely that any future court case will hinge on whether DOL has the legal authority to update the salary threshold every three years. Under the proposal, the salary level adjustments would be based on “the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region.” The overtime proposal includes a severability provision that would preserve certain portions of the rule if one piece is invalidated in a court.
Please provide your input to NCA by completing this short survey by Friday, Oct. 27.
Contact NCA President & CEO Joe Trauger at [email protected] if you have any questions or comments.