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The Labor Department issued a final rule to increase the number of employees who are entitled to overtime compensation.
Details: Issued under the Fair Labor Standards Act, the final rule:
Will raise the minimum salary threshold to $43,888 on July 1 and then to $58,656 on Jan. 1, 2025, replacing the current salary threshold of $35,568.
Will adjust the threshold for “highly compensated employees” to $132,964 on July 1 and then to $151,164 on Jan. 1, 2025, from the current threshold of $107,432.
Will adjust salary thresholds every three years starting July 1, 2027.
ICBA Opposition: In a comment letter on the proposed rule, ICBA said the change:
Would far outpace the rate of inflation and be unduly burdensome to small businesses.
Could force community banks to reduce staff, shorten business hours, curtail services, close branches, and reduce employees’ hourly pay.
Likely exceeds the department’s legal authority because it would arbitrarily require millions of employees who work in bona fide executive, administrative, or professional roles to be paid overtime.
Background: The Labor Department in 2019 issued an overtime final rule that was based on its 2004 overtime methodology, as advocated by ICBA. That final rule—which came after a federal judge in 2017 struck down a rule issued in 2016—increased the salary level test from $23,660 to $35,568 per year and the total annual compensation level for "highly compensated employees" from $100,000 to $107,432 per year.