The US Department of Labor (DOL) is making significant strides towards introducing a new overtime rule, marking an important development in labor regulations. On July 13, 2023, the DOL took a critical step by submitting a draft of the overtime rule to the White House's Office of Management and Budget (OMB) for final review. This action places the overtime rule at Step 4 of the 9-step federal regulatory process and suggests that a proposed rule may be on the horizon within the next 100 days.
Executive Order 12866 mandates that the OMB conduct a cost-benefit analysis for economically significant regulations, a criteria the overtime rule is highly likely to meet. The OMB has 10 days to make an initial determination of the rule's economic significance, followed by another 90 days for a comprehensive review. However, it's important to note that the 90-day review period can be extended indefinitely by the DOL or for up to 30 days by the OMB.
While the DOL has previously postponed the overtime rule's release, further delays may complicate the Biden administration's defense of the rule against anticipated legal challenges. The DOL has confirmed sending a proposed rule to the OMB but has yet to comment on the timeline.
HR professionals are eagerly anticipating the release of the proposed rule, as it will provide valuable insights into what to expect in the final rule. One key expectation is an increase in the minimum salary for employees exempt from overtime requirements under the Fair Labor Standards Act (FLSA). Currently set at $35,568 per year, experts anticipate the new minimum salary to fall within the range of $46,800 to $52,000 annually. Additionally, the DOL may consider annual inflation adjustments and modifications to the duties tests for overtime exemptions.
Once the proposed overtime rule is published, the public will have a minimum of 30 days to submit comments before the DOL can issue a final rule. Following this, the final rule, if classified as a major rule, would come into effect no sooner than 60 days after its publication in the Federal Register. As the DOL progresses through the regulatory process, HR professionals and employers should stay informed and prepare for potential changes in overtime regulations.
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