The U.S. Department of Labor is expected to propose new overtime rules next month that will likely raise the salary threshold exemption for white-collar workers, thereby expanding the number of employees eligible to earn overtime.
Tammy McCutchen, former administrator of DOL’s Wage & Hour Division, told attendees at the Society for Human Resource Management’s (SHRM) 2022 annual conference last week in Washington, D.C., that the proposed rule may also make changes to the “duties test,” which is also part of the employee exemption analysis.
The Obama administration had proposed a rule change in 2016 – which was later invalidated by a federal court – that would have raised the salary-level requirement for white-collar exemptions from $23,660 to $47,467 a year. Workers earning less than $47,467 would have been eligible for overtime if they worked more than 40 hours a week.
Later, under the Trump administration, the DOL raised the threshold from $23,660 to $35,568. That rule has been in effect since Jan. 1, 2020. If the DOL adjusts for inflation, the salary exemption threshold would rise to $42,594 annually, McCutchen said.
However, a coalition of more than 100 labor unions and other advocacy groups are seeking a much higher exemption threshold. They petitioned DOL last year to raise the exemption threshold to $73,551 per year and to $82,745 by 2026.
McCutchen, who is now a consultant affiliated with Resolution Economics, predicted that if DOL seeks to raise the salary threshold exemption higher than $50,000 a year it would cause “litigation all over the place” and risk being struck down by the courts, just as the Obama administration proposal was.