Employers Await Changes to the Overtime Rule

June 27, 2023
Hall Benefits Law, LLC

According to the DOL’s most recent regulatory agenda, employers expect to learn the specifics of the U.S. Department of Labor’s (DOL) proposed changes to the overtime rule in May 2023. The reasons for delays in releasing the proposed rule are unclear, although some speculate that it is due to anticipated changes in the Fair Labor Standards Act (FLSA). The delays also may be a function of more pressing matters on the DOL’s agenda.

Minimum Salary Threshold for White-Collar Exemptions to the Rule

One expectation is that the DOL will significantly raise the salary threshold for white-collar exemptions to the rule. The current threshold is $684 per week or an annual salary of $35,568. The DOL could increase the threshold by $10,000 to $15,000 annually. If the increase is substantial, some industries could object and make legal challenges to the change more likely based on the DOL’s failure to change the salary threshold through the regular rulemaking process.

Expansion of the Duties Test

The DOL also may expand the duties test, making it more challenging for employers to classify some employees as exempt, short of changing their job functions. Currently, separate duties tests exist for the three white-collar exemptions: executive, administrative, and professional. Significant changes to the duties test could result in legal challenges under the “major questions” doctrine, which allows only Congress to make regulatory changes of vast economic and political significance.

One potential change would be for the DOL to adopt California’s test, which requires exempt employees to exclusively perform clear, exempt duties, more than half the time during each work week. In this situation, employers might have to change some employees’ duties, pay overtime for some employees, or prohibit some employees from working more than 40 hours per week.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

The following two tabs change content below.

Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

Latest posts by Hall Benefits Law, LLC (see all)