On Aug. 30, 2023, the United States Department of Labor (DOL) released its highly anticipated proposed overtime rule. This rule, if finalized, would increase the minimum salary amount required to be paid to executive, administrative and professional (EAP) employees and the required annual compensation to be paid to highly compensated employees (HCEs) in order for these employees to be considered exempt from the Fair Labor Standards Act (FLSA) overtime pay requirements. The DOL is also proposing automatic updates to these amounts every three years.
The proposed rule does not include any changes to the standard duties test used to distinguish between FLSA-exempt and non-exempt employees. The DOL estimates that 3.6 million workers exempt from FLSA overtime under the current regulations would become newly entitled to overtime protection under the FLSA.
Review the proposed rule details.
Next Steps:
· Review the proposed overtime rule (PDF) and frequently asked questions published by the DOL.
· The proposed rule would become effective 60 days after publication of a final rule in the Federal Register.
· There is no action required at this time, and legal challenges to the rule are expected.
· While the proposed rule does not include changes to the standard duties test, if you would like to assess an employee’s eligibility for overtime under federal law, ADP TotalSource offers an assessment tool which can be accessed by navigating to HR > Quick Links > HR Compliance Tools. Look for the section that says “In addition, you have access to tools that will assist you in determining whether an employee is exempt from overtime....” and click the link.
· Employers should take this time to determine which employees would be impacted if a final rule is issued and becomes effective, taking into consideration any state law requirements. If state law is more protective (i.e., requires a higher salary amount), then state law must be followed.
· My TotalSource® offers reporting to see your employees’ salary history and current salary amount.
This report can be accessed by navigating to Reporting > HR Reports > Salary History from My TotalSource.
· Interested persons are invited to submit written comments on the proposed rules on or before 60 days after publication of the proposed rules in the Federal Register.