On August 30, 2023, the Department of Labor (DOL) proposed a rule which will increase the minimum salary threshold for the “white collar” overtime exemption under the Fair Labor Standards Act (FLSA) from $35,568 to $55,068 annually (equivalent to $17.10 per hour and $26.48 per hour, respectively). To be exempt from overtime pay, workers must be paid a salary of at least $55,068 and must also meet certain job duties for executive, administrative, and professional employees. Workers with a salary below this threshold must be paid overtime if they work more than 40 hours a week. This threshold may be increased in the final rule based on the most recent data available, possibly up to $60,209 (equivalent to $28.95 per hour). DOL will also increase the total annual compensation requirement for highly compensated employees from $107,432 per year to $143,988 per year. DOL also plans to automatically update the earnings thresholds every three years.
DOL estimates that this rule will have the following Year 1 costs for small entities:
- An average total cost of $4,323 per entity, with a range of total costs of $1,833-$146,781 per entity.
- One hour to read the rule.
- 75 minutes of manager costs for wage adjustment.
- Average payroll increases of $2,638 per affected entity, with an estimated range of payroll cost increases of $768-$103,871.
- Average weekly earnings for affected workers in small entities are expected to increase by about $6.91 per week per affected worker.
- DOL estimates the following costs per small entity in selected industries: construction ($4,028), retail trade ($5,210), food services and drinking places ($9,332), and nonprofit ($3,570).
- DOL estimates that small entities will spend 10 minutes to respond with automatic salary updates every three years.
Advocacy is seeking feedback and data on the economic impact of this rule on your small business, small non-profit, and small governmental jurisdiction with a population of fewer than 50,000. We also welcome recommendations on regulatory options that may minimize the cost of this rule for small entities.
Comments on this rule are due November 7, 2023.
- Read the DOL press release and FAQ.
- Submit comments on the proposed rule.
Advocacy contact: Send an email to Janis Reyes at janis.reyes@sba.gov.
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