DOL seeks to expand the right to overtime pay significantly

On the eve of the Labor Day weekend, the United States Department of Labor (DOL) issued a proposed rule that – if adopted – will dramatically increase the number of people who have the right to overtime pay under the Fair Labor Standards Act (FLSA). The FLS obligates employers to pay covered employees an hourly rate that is 1.5 times their standard hourly rate when they work more than 40 hours in a specific week. To be a covered employee entitled under the FLSA to overtime pay for overtime work, however, an employee must not work in an executive, administrative, or professional role involving specialized knowledge and experience. In addition, employees’ annual pay must be below a salary threshold established under the FLSA.

If implemented, the DOL’s proposed change will substantially raise the pay threshold for being eligible to receive overtime pay for overtime work: from $35,358 in annual pay, established by the prior Federal administration, to $55,000 in annual pay, proposed by the Biden Administration. Under the current threshold of $35,358 imposed by the prior Federal administration, only approximately 15% of salaried employees are eligible for overtime pay when they work more than 40 hours in a given week. By contrast, according to an analysis published by the Associated Press, approximately 60% of salaried employees were eligible for that overtime pay when the FLSA pay threshold better accounted for inflation in prior decades. The DOL’s proposed rule represents a necessary change because employee pay has stagnated in recent decades, a situation aggravated by the high rates of inflation during the past year. Consequently, the DOL’s proposed rule will enable approximately 4 million more employees in the United States to receive overtime pay for overtime work if put into effect going forward. In the context of widespread wage theft across the country, this modest reform cannot happen soon enough.

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