Department of Labor Proposes Rule to Make More Employees Eligible for Overtime Pay

  • Aug 31, 2023
  • FLSA
  • David Richie

Yesterday, the U.S. Department of Labor issued a Notice of Proposed Rulemaking that would increase the salary threshold certain employees must meet to be exempt from the Fair Labor Standards Act’s (FLSA) overtime pay requirements. If the DOL’s proposed rule becomes law, many salaried employees who were historically exempt from overtime pay would be entitled to one-and-one-half times their regular rate of pay for hours worked in excess of 40 in a workweek.


Under the FLSA’s overtime pay regulations, employees are entitled to earn one-and-one-half times their regular rate of pay for hours worked in excess of 40 in a workweek. However, the FLSA contains overtime pay exemptions for executive, administrative, professional, outside sales, and computer employees who (1) are paid on a salary basis; (2) are paid at least the designated minimum weekly salary; and (3) perform certain job duties.

Under current law, the salary threshold for exempt employees is $684 per week ($35,568 per year).

Changes Under the DOL’s Proposed Rule

The DOL’s proposed rule contains the following significant changes from current law:

    1. Increase the salary threshold that must be met for an employee to be exempt from overtime pay from $684 per week to $1,059 per week ($55,068 per year).
    2. Increase the total annual compensation requirement for “highly compensated employes” to be exempt from overtime pay from $107,432 per year to $143,988 per year.
    3. Automatically update earnings thresholds every three years.

According to the DOL, if its proposed rule becomes law, 3.4 million currently exempt employees who earn at least the current salary threshold of $684 per week but less than the proposed salary threshold of $1,059 would become eligible for overtime pay.

Notably, as part of the proposed rule, the DOL is not proposing changes to the standard “duties” test, which is well known to employers and employees.

Next Steps

The DOL’s proposed rule is not yet the law of the land. Next, it will go through a notice-and-comment period during which interested parties can provide input and suggest changes to the rule. The comment period will be open for 60 days following publication of the rule in the Federal Register.

Once the comment period closes, the DOL will review the comments and determine whether to change the rule before it becomes final.

Bottom Line

If it becomes effective, the DOL’s proposed rule will have significant effects, as millions of currently exempt, salaried employees may become eligible for overtime pay. While the rule still must go through a lengthy process before becoming effective, employers should begin planning and budgeting for its implementation now.

We will continue monitoring the proposed rule. For now, employers should contact their trusted Felhaber attorneys with any questions.