DOL Overtime Rule Coming Soon (No, Really This Time!)

Author: Michael Cardman, HR & Compliance Center Senior Legal Editor

July 13, 2023

The US Department of Labor (DOL) yesterday submitted a draft overtime rule to the White House's Office of Management and Budget (OMB) for a final review.

This means that the overtime rule is now at Step 4 of the 9-step federal regulatory process - and that the DOL is likely to issue a proposed rule within the next 100 days.

Under Executive Order 12866, the OMB is required to perform a cost-benefit-cost analysis for any new regulation that is economically significant (a criterion the overtime rule is almost certain to meet).

The OMB has 10 days to make a preliminary determination of whether or not the overtime rule is economically significant. After that, the OMB will have another 90 days to review the rule.

However, this 90-day period may be extended indefinitely by the DOL or for as many as 30 days by the OMB.

Already having delayed the overtime rule several times before, it's possible the DOL could delay it again. That seems unlikely, as each delay will make it more difficult for the Biden administration to defend the rule from an expected legal challenge.

The DOL confirmed to HR & Compliance Center it had sent a proposed rule to OMB but did not respond to a request for comment about the timeline.

HR professionals are eagerly awaiting the release of the proposed rule, as it will give them a strong indication of what they can expect to see in the eventual final rule.

First and foremost, the DOL will likely propose raising the minimum salary for most employees exempt from the overtime requirements of the Fair Labor Standards Act (FLSA) from its current level of $35,568 per year. Some experts anticipate the new minimum salary will be somewhere in the range of $46,800 to $52,000 per year.

The DOL also may propose annual inflation adjustments and/or make changes to the overtime exemptions' duties tests.

After a new overtime rule is proposed, the public will have at least 30 days to comment on it before the DOL can issue a final rule. Then the final rule would take effect no sooner than 60 days after it is published in the Federal Register, assuming it is classified as a major rule.