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New overtime rule raises salary level in two phases, with first set for July 1, 2024

clock with red seconds hand area overtime; Shutterstock ID 312512738
The rule will increase — in two steps — the minimum annual salary threshold that determines overtime pay eligibility.

The Department of Labor (DOL) has released its long-awaited final overtime rule that raises the salary thresholds for overtime exemptions.

Originally proposed in fall 2023, the rule will increase — in two steps — the minimum annual salary threshold that determines overtime pay eligibility under the Fair Labor Standards Act, with an auto-escalator every three years.

The National Retail Federation (NRF) issued a statement in which it acknowledged the steps that DOL took to phase in the full impact of the new rules in response to employer concerns. 

“The delay in full implementation of the new higher threshold, for example, will enable retailers to prepare for the full impact of the rule more thoroughly,” said David French, senior VP of government relations at NRF. “We remain concerned, however, that the new rules curtail retailers’ ability to offer the most flexible, generous and tailored benefits packages to lower-level exempt employees across the industry. 

At the same time, the NRF expressed concerns that the DOL has not provided adequate time for retailers to implement changes to the first phase of the rule, which will increase the minimum salary threshold from $35,568 to $43,888 by July 1, 2024. It is urging the Department to allow until at least Sept. 1, 2024, to implement this change.  

“Even with the phased-in implementation timeline, the new rules will cause employers to reexamine compensation packages for millions of workers nationwide,” French said. “Some workers may lose the status of a managerial position. Some may lose much-desired flexibility as to when, how and where they work, including the ability to work from home. Some may lose the capability to travel on the employer’s behalf. Some may lose valuable educational and training experiences.

French added that retailers remain concerned that the inclusion of future automatic increases exceeds the Department’s legal authority and oversteps longstanding Fair Labor Standards Act and Administrative Procedure Act principles.

The Retail Industry Leaders Association issued a statement in which it said the final rule serves to hinder growth and limit the very flexibility that workers want."

Retailers are concerned with the approach, the substance, and potential impacts of the DOL’s final overtime rule," RILA stated. "In pushing forward with a rule that rejects sensible comments from the nation’s largest employers and neglects the realities of today’s economy, the DOL takes an overzealous and unreasonable tack, favoring a controversial and legally dubious methodology to score political points.

Last November, NRF submitted comments to DOL opposing its proposed rule on overtime regulation. Additionally, NRF commissioned Oxford Economics to analyze the economic effects if implemented, which found that the proposed rule could impact more than 7.2 million workers.

RILA submitted comments to the Department of Labor in November 2023 outlining the industry’s full concerns with the proposed rules. See full comments here.

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