On September 8, the Department of Labor (DOL) announced the publication of a Notice of Proposed Rulemaking (NPRM), Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees. Referred to simply as the “overtime rule”, the proposal aims to increase the salary threshold under which employees would be required to receive overtime pay if exceeding 40 hours of work in a week. Under existing provisions of the Fair Labor Standards Act (FLSA), most salaried workers earning more than $684 per week ($35,568 per year) are not entitled to overtime pay, but workers exceeding that threshold are exempt from earning time and a half.
The proposed rule would raise that threshold to $1,059 per week, or $55,068 per year, making an estimated 3.6 million workers earning somewhere between the existing threshold and the proposed threshold eligible for overtime pay that isn’t currently mandated. It would also install a mechanism that would automatically update the salary threshold every three years to account for inflation, wage growth, etc.
What happens next?
The proposed rule is subject to a 60-day comment period, which closes on November 7, 2023. After that, the DOL would review input from stakeholders before issuing a final rule. Litigation is also a possibility. In 2016, the Obama administration attempted to raise the salary threshold to $913 per week ($47,476 per year), also including an automatic update mechanism. Several states and business groups challenged the rule in court, and U.S. District Judge Amos Mazzant granted summary judgement that the DOL had exceeded its rulemaking authority, and the proposed rule did not go into effect.
What could it mean for Fort Worth?
If the rule ultimately goes into effect as proposed, it will impact the finances and operations of businesses across Fort Worth with employees earning between $35,568 per year and $55,068.
In Fort Worth, the mean income per capita was $32,569 as of 2021, per the U.S. Census. In Texas, that figure was $34,255 in 2022, and $37,638 nationally. That means the mean income per capita in Fort Worth is 91.6% of the existing salary threshold, while mean pay in Texas is 96.3% of the existing salary threshold, and nationally it’s 105.8% of the existing threshold.
While not all workers are salaried and wage data has likely changed since the U.S. Census’ most recent numbers, the data seems to indicate Fort Worth would be more heavily impacted on average than the state of Texas or the country as a whole. In other words, Fort Worth appears to have more workers who would be impacted by the increased salary threshold, and therefore more employers who would need to come into compliance with a new rule.
The proposed rule can be found in its entirety with additional information on the DOL’s website.
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