White House to Review Proposed Overtime Rule, DOL to Publish in August

On July 12, the U.S. Department of Labor (DOL) submitted a proposed rule to update overtime regulations under the Fair Labor Standards Act (FLSA) to the White House’s Office of Management and Budget (OMB) for final review. The OMB will have 10 days to make a preliminary determination of whether the proposed overtime rule is economically significant. After that, the OMB will have another 90 days to review the rule. According to the DOL’s latest regulatory agenda, the publication of the proposed overtime rule is set for August 2023.

This announcement comes after a series of delays. The DOL initially planned to release proposed rule changes in April 2022 before delaying until October 2022. The agency later amended its target release date to May 2023, then announced in its spring regulatory agenda that the proposed overtime rule would be published in August 2023.

What Will the Proposed Overtime Rule Address?

The proposed rule is expected to address implementing exemptions from the FLSA’s minimum wage and overtime requirements for executive, administrative and professional employees. It could also clarify classifications of exempt employees and increase their salary levels under the FLSA.

Some experts believe the DOL will create automatic annual or periodic increases to exempt employees’ salary levels by linking them to the consumer price index. This would allow exempt employees’ salary thresholds to increase without formal rulemaking.

What’s Next?

Submitting a draft overtime rule to the OMB signals that the DOL is likely to issue a proposed rule within the next 100 days. After the DOL publishes a proposed rule in the Federal Register, time will be designated for the public to comment. The agency will review the comments and decide whether to proceed with publishing a final rule. If a final overtime rule is published in the Federal Register, it will likely be challenged legally.

Although employers aren’t legally obligated to change how they classify or pay employees until the DOL’s overtime rule is finalized, they should closely monitor the DOL’s rulemaking process. We will notify you of any critical changes or announcements.