Update applicable to:

All employers with applicable exempt employees

What happened?

On July 12, 2023, the U.S. Department of Labor sent to the White House’s Office of Management and Budget its proposed rule on “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees” to the White House Office of Information and Regulatory Affairs (OIRA) for review. This is a required initial step before the proposed overtime rule is published.

What are the details?

OIRA, a part of the president’s Office of Management and Budget, is responsible for reviewing all proposed and final rules, as well as regulatory actions, before they are implemented. The review process usually takes 30 to 60 days, although OIRA has up to 90 days for the review.

If the current timeline holds, the Department of Labor (DOL) may publish a proposed rule close to the August 2023 target date mentioned in the Spring 2023 Regulatory Agenda. However, during OIRA’s review, the proposed rule is not public, so specific details about its content are not available. OIRA holds meetings to gather input from concerned parties about proposed rules under review.

The Department of Labor (DOL) is expected to propose changes to the salary threshold used to determine whether certain white-collar employees are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). Currently set at $35,568 per year by the Trump administration in 2019, the threshold is subject to revision.

The Biden administration has not yet provided a specific figure for the new threshold. However, a letter from congressional Democrats in 2021 urged the DOL to adopt a threshold in line with the historical high point of salary thresholds, defined as the 55th percentile of earnings of full-time, salaried U.S. workers. This would set the threshold at $82,732 by 2026, according to the letter’s proposal.

For more information, please see the links below:

Proposed Rule Review Page

Article

What do employers need to do?

Employers can visit the above review page to check on the status of the proposed rule. Law firms will release updates once there is movement. Employers should consult their employment attorney in regard to making pre-emptive decisions and planning so that they will be prepared for whatever changes are implemented.

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