US DOL Proposes New Overtime Threshold
The U.S. Department of Labor has proposed extending mandatory overtime to an additional 3.6 million workers, including thousands of salaried employees in Connecticut.
DOL released a proposed rule Aug. 30 revising regulations issued under the Fair Labor Standards Act implementing the exemption from minimum wage and overtime pay requirements for executive, administrative, and professional employees.
The rule requires that employers pay overtime premiums to workers who earn a salary of less than $1,059 per week—$55,000 annually.
Nonexempt employees would be eligible to earn the overtime rate—time-and-a-half—for time worked over 40 hours a week.
The current salary threshold of $35,568 per year, or $684 weekly, was set by the Trump administration in 2020.
In 2017, a federal judge struck down an Obama administration rule that raised the threshold to $47,476.
Under the agency’s proposal, the threshold will adjust every three years to account for inflation.
DOL also proposed adjusting the threshold for highly compensated workers.
Salaried workers who currently earn more than $107,432 annually and do not primarily perform management-related duties are eligible for overtime.
The new proposed rule will raise that salary threshold to $143,988 annually.
Many national business organizations had urged the department to delay changes, with inflation, supply chain disruptions, and worker shortages all driving up operating costs.
The labor department is accepting public comments on the proposed rule for 60 days following publication in the Federal Register.
CBIA’s Eric Gjede said as Connecticut workers earn an average $81,237 annually, fifth highest in the country, he did not expect the proposed rule to have an immediate significant impact in the state.
“However, as the threshold adjusts for inflation every three years, more and more Connecticut employers will face higher labor costs,” he said.
“That will just become an additional burden for businesses. It’s going to become a bigger and bigger problem every year.”
Gjede added that Connecticut is among the costliest states in the country to run a business, with labor costs one of the biggest drivers.
“This should be an opportunity for state lawmakers to change course and address Connecticut’s business tax burden and high labor, healthcare, and energy costs,” he said.
“Recent legislative sessions have missed numerous opportunities to address high costs, particularly for struggling small businesses.”
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