Employer Alert: Dept. of Labor Expected to Publish Update to Overtime Exemption Thresholds

Employer Alert: Dept. of Labor Expected to Publish Update to Overtime Exemption Thresholds

By Liz Hartsel

Last August, the Wage and Hour Division proposed an update to overtime eligibility thresholds, which would increase the salary threshold for employees automatically owed overtime pay from $35,568 to approximately $55,000, meaning millions more workers would qualify for overtime protections. In mid-April, the Office of Management and Budget completed its review of the much-watched and highly anticipated rule and the Department of Labor is expected to officially publish it soon.

Ultimately, the final salary threshold could be as high as $60,209 because the amount will be based on the most recent Bureau of Labor Statistics salary data, which has been updated since 2023 when the Wage and Hour Division initially proposed the rule. Salaried employees at or below the threshold will be entitled to an additional one-half times their regular hourly rate (obtained by dividing the salary by the number of hours for which the salary is intended to compensate) for each hour over 40 plus their salary. 

If and when the rule is published, employers should prepare to see a corresponding increase in payroll costs. However, Colorado employers may notice less of an impact as the new rule will more closely align with Colorado’s current limits, which in 2024 are $1,057.69 per week, equivalent to an approximately $55,000 annual salary. 

In addition to increasing the standard salary level, the proposed rule would also raise the highly compensated employee’s total annual compensation threshold and provide an automatic updating mechanism that allows for the timely and efficient updating of all the thresholds to reflect current earnings data.If you have questions about this rule, how it may impact your business, or how to prepare for compliance, please contact a member of our employment law team.

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