FLSA Overtime Changes Proposed: 2023

The U.S. Department of Labor (DOL) late last month proposed a new rule that would change the salary threshold for exempt employees under the Fair Labor Standards Act (FLSA).

Federal officials have been mulling changes to the exempt salary threshold for some time. The latest update is the DOL’s Aug. 30, 2023, notice of proposed rulemaking.

Proposed revisions include increases to the standard salary level and the highly compensated employee total annual compensation threshold, as well as creating an “automatic updating mechanism that would allow for the timely and efficient updating of all the thresholds to reflect current earnings data,” according to the DOL.

Once published in the Federal Register, the notice of proposed rulemaking will be open for public comment for 60 days. (UPDATE: The comment period is now open.)

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2023 FLSA Overtime Proposal

To begin, the DOL’s proposal would raise the salary threshold level for exempt workers under the FLSA to $1,059 per week (approximately $55,000 annually) from its current rate of $684 per week ($35,568 a year).

The standard salary level has been in effect since Jan. 1, 2020 — though employers should note that some jurisdictions already have exempt salary thresholds above the FLSA — and the DOL estimates the proposed salary adjustment would impact 3.6 million employees in the U.S.

Meanwhile, officials have outlined other items under the proposed rule, including:

• Not making changes to the current duties test
• Appling the standard salary level to Puerto Rico, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands, and increasing the special salary levels for American Samoa and the motion picture industry
• Increasing the highly compensated employee total annual compensation requirement to the annualized weekly earnings of the 85th percentile of full-time salaried workers nationally, which would be $143,988 per year based on current data
• Automatically updating earnings thresholds every three years with current wage data

While the figures above are those outlined in the latest missive from the DOL, officials say they will use the latest data available when pushing through any changes, which means the numbers could be higher.

Lastly, despite this latest proposed rule update, it should be noted that there was a previous iteration in May 2022 that never became final. Employers that have been keeping an eye on potential FLSA overtime changes may have to continue to wait.

2023 Federal Labor Law Poster Updates

FLSA Overtime Exemptions

As a reminder, to qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis.

The DOL outlines the categories and the tests that must be met under the federal FLSA. Find more information from the DOL’s Wage and Hour Division, which includes exempt salary information on:

• Executives
• Administrative workers
• Professionals
• Computer employees
• Outside sales workers
• Highly compensated employees
• Blue-collar workers
• Police, firefighters, paramedics and other first responders

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Employment Law Compliance Management

The latest news from the DOL illustrates the ever-evolving nature of employment law compliance.

Employers must monitor the basics, such as labor law posters, minimum wage and paid leave, as well as other legislation related to employee rights, including:

• Hair discrimination laws
• Protections for recreational marijuana use
• Ban the box
• Payout of unused vacation time upon separation.
• Predictive scheduling

These and other matters will continue to create hurdles for employers, especially with little broad activity at the federal level. Even with the proposed FLSA overtime changes, the landscape of employment law still hinges on smaller jurisdictions passing their own laws, making compliance all the more difficult for employers that operate across the U.S.

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Proposed FLSA Overtime Regs: Conclusion

The saga of new federal overtime regulations continues.

And despite the latest DOL notice of proposed rulemaking, there could be legal challenges ahead due to there being vacancies in key federal positions and potential dissent in the high court.

As always, the complexities of employment law compliance remain a major challenge for employers.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.