DOL Finally Proposes New Overtime Salary to $55,068! What Do Employers Need to Do to Mitigate All the Changes and Still Comply?
August 30, 2023- Employers may need to adjust their pay practices now that the Labor Department has issued its long-anticipated proposal to raise the salary threshold for exempt employees – a change that could make more of your employees eligible for overtime premiums. The U.S. Department of Labor (DOL) announced today that it intends to significantly raise the exempt salary threshold from $684 per week to $1,059, meaning employees would need to earn $55,068 or more per year to be exempt from OT pay. An estimated 3.6 million U.S. workers would become eligible for overtime pay under the proposed rule.
Although it’s just a proposal at this point, we expect the DOL to prioritize this rule and move swiftly through the notice and comment period. In the meantime, you should start preparing for what could be big changes to your compensation plans.
DOL’s proposal also would increase the total annual compensation requirement for highly compensated employees to $143,988 per year. The proposal outlines an automatic update provision for future overtime thresholds beyond what is included in the proposed rule and would not make changes to the FLSA’s “duties test” for determining overtime eligibility. Once published in the Federal Register, the proposal will be subject to a 60-day public comment period.
Once the comment period closes, the agency is required to take each comment into account and then determine whether to adjust the proposed rule before it becomes final. This course could take several months, although we expect the DOL to fast-track the process given the importance of this rule. The agency will then issue a final rule taking the comments into account, and it will then take effect within a few weeks of the final proposal being issued.
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Why Should You Attend:-
Although the announcement indicates a proposal, Employers should learn that the previous overtime increase created severe complications regarding communications to impacted employees, a decrease in staff morale for those who believed that it was a demotion, loss of benefits when they decided to reduce hours, and costs, challenges with job descriptions and expected impact in Employer’s budget. It led to an increase in turnover and a decrease in retention.
Employers can take the time to review and prepare for setting guidelines on how they communicate the impact to employees, make effective decisions on how to cut costs without reducing employee hours or benefits, and develop a training program for managers and newly non-exempt employees.
Who Will Benefit:-
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