The Department of Labor Wage and Hour Division’s proposed overtime rule will be published in May, according to the Fall 2022 Unified Agenda of Regulatory and Deregulatory Actions published earlier this month by the White House.
The overtime rule sets a salary threshold used to determine which employees are eligible to receive overtime pay when they work more than 40 hours per week.
“One of the ‘primary goals’ of the planned rulemaking is to update the minimum salary level requirement for employees who, by virtue of their duties, would qualify for an [Employee Assistance Program] exemption,” attorney Allan S. Bloom, the leader of Proskauer’s Wage and Hour Practice Group, wrote in the National Law Review.
Typically, eligible employees must be paid 1.5 times their regular rate of pay for all hours worked beyond 40 in a workweek. There are exemptions for executive, administrative, professional, computer and outside sales employees under the Fair Labor Standards Act.
To qualify for a “white collar” exemption under the current overtime rule, all of the following tests must be met:
- The employee must be paid at least $684 per week on a salary basis (as defined in the regulations);
- The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
- The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
- The employee must have the authority to hire and fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees is given particular weight.
Companies can find themselves in hot water by not closely examining the overtime rule. For example, a senior living community serving more than 900 residents was required to pay almost $7,000 in back wages after denying a salaried worker overtime wages.
This will be the first time since January 2020 that the overtime rule is updated. At that time, the weekly minimum salary for overtime exemptions was increased from $455 per week ($23,660 per year) to $684 per week ($35,568 per year).
“The increase was the first in 15 years, but nowhere near the boost the Obama administration tried to roll out in 2016 (to $913 per week, or $47,476 per year),” Bloom noted.
The proposed rule originally was slated to be introduced in April 2022 and then was delayed to October 2022, according to HR Dive.