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U.S. Department of Labor Proposes to Increase Overtime Pay Threshold for White-Collar Workers

The U.S. Department of Labor (DOL) announced on August 30, 2023, a proposed rule that would amend the current requirements employees in white collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA).

The FLSA requires employers to pay non-exempt employees overtime pay at a rate of one and a half times their regular hourly wage for hours worked over 40 in a workweek. However, there are certain white-collar occupations that are exempt from overtime pay, if the employees meet certain salary and job duties requirements.

Salary Level Increase

The current salary level for the white-collar exemptions is $684 per week or $35,568 annually. The DOL's proposed rule would increase the salary level to $1,059 per week or $55,068 annually. The DOL also proposes to create an automatic updating mechanism that would adjust the salary level every three years to reflect changes in the cost of living.

The DOL's proposed rule would also make changes to the job duties requirements for the white-collar exemptions. The proposed rule would clarify that the job duties requirements must be met by all of the employee's job duties, not just some of them. The proposed rule would also make it more difficult for employers to claim that employees are exempt based on their job duties.

The DOL's proposed rule is open for public comment for 60 days. The DOL will consider all comments received before finalizing the rule.

The proposed rule is a significant development for white-collar workers. If the rule is finalized, it would mean that millions of workers who are currently exempt from overtime pay would become eligible for overtime pay. This would give these workers more financial security and help to close the gender pay gap.

The proposed rule is also likely to have a significant impact on businesses. Businesses that currently classify their white-collar workers as exempt may need to change their classification and start paying overtime to these workers. This could increase their labor costs.

The DOL's proposed rule is a complex issue with far-reaching implications. It is important to stay up-to-date on the latest developments and to consult with a trusted advisor throughout this process.

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