DOL Proposes New FLSA Overtime Salary Threshold

The U.S. Department of Labor (DOL) has proposed increasing the annual salary threshold for white collar employee exemptions to overtime under the Fair Labor Standards Act (FLSA). Under the DOL proposal, the overtime salary threshold would increase from $35,568 to $55,068, with automatic increases every three years. The revised standard would apply to all fifty states and U.S. territories, except American Samoa.

According to the DOL, the proposed increase would restore and extend overtime protections to lower-salary workers who work more than 40 hours per week alongside hourly workers receiving overtime and performing the same functions. The proposal also would reinstate overtime protections for workers in American territories, returning to a former policy for these territories. Under that policy, the overtime salary threshold also applies if the federal minimum wage applies to the U.S. territory.

If the proposed rule goes into effect as written, the DOL estimates that about 3.6 million more workers would be entitled to overtime pay. This figure would include about 300,000 more employees in the manufacturing sector, 300,000 retail workers, 180,000 hospitality and leisure workers, and 600,000 health care and social services workers.

Employees qualify for the white-collar overtime exemption under FLSA if their salary exceeds the annual overtime salary threshold and their job duties meet certain tests. Otherwise, employers must pay them overtime of at least one-and-a-half times their regular hourly wage for any hours worked beyond 40 hours a week.

Before January 1, 2020, the annual overtime salary threshold was $23,660. Former President Obama issued a rule doubling the threshold, but a federal judge ruled that the DOL exceeded its administrative authority by excessively increasing the salary threshold.

Former President Trump’s DOL then increased the annual overtime salary threshold to $35,568. Based on inflation, today’s current threshold would be $42,594.

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