In recent HR news, President Trump’s U.S. Labor Department (DOL) has dropped its defense of the Fair Labor Standards Act (FLSA) overtime rule. So, what exactly does that mean overall and, in particular, for small businesses? Here’s what we know so far.
The what:
- Late last year, President Obama’s DOL raised the salary threshold for overtime eligibility from $455 per week (or $23,660 annually) to $913 per week (or $47,476 annually). This meant that employees making under $47,476 were to be paid time-and-a-half if they worked more than 40 hours a week.
- After states and business groups challenged the rule in court, a federal district court blocked it just days before it was set to take effect, saying that the DOL overstepped its authority.
- After President Trump took office, things were up in the air in regard to the lawsuit. Just recently, the DOL dropped its defense of the overtime rule but asked the court to approve the use of a threshold in the future.
But what does this mean? Will overtime eligibility stay at $23,600 annually from here on out? Most likely, no. Even though President Trump’s DOL has dropped its defense of the Obama administration’s overtime rule, it requested that the court not address the validity of the threshold and that “the Department intends to revisit through new rulemaking.” This indicates that DOL will likely propose a different, lower threshold in the future.
How will this affect you as a small business? For now, many employers are breathing easier because they don’t have to pay employees who make less than $47,476 a year time-and-half for overtime. The $23,660 threshold is quite outdated and will likely be bumped up – but by just how much is still the ultimate question.
Stay up to date with everything you need to know about the FLSA and other HR issues on the Smart HR blog.
