The U.S. Department of Labor has released its long awaited proposed rule raising the salary basis threshold under the Fair Labor Standards Act (FLSA) that would be used in determining the exempt status of executive, administrative, and professional employees. As Congress returns from its summer recess, the primary focus will be on avoiding a partial government shutdown that will occur unless Congress agrees to fund the federal government for the fiscal year that starts on October 1st. The Equal Employment Opportunity Commission (EEOC) has issued a new strategic plan setting forth its priorities through fiscal year 2026. The National Labor Relations Board (NLRB) has finalized a rule designed to provide for faster representation elections to determine whether the workers want to be represented by a union. The U.S. Treasury Department has issued a report detailing the economic benefits of unions.
DOL Proposes Overtime Rule – The Department of Labor (DOL) issued a proposed rule that would increase the salary basis threshold for executive, administrative, and professional employees from $684/week ($35,568/year) to $1,059/week ($55,068/year). DOL estimates that the proposed change would extend overtime protection to 3.6 million workers. DOL believes that in the first year, the proposed rule would impose $1.2 billion of direct costs on employers. DOL Acting Secretary Julie Su stated the proposed rule “would help restore workers’ economic security by giving millions more salaried workers the right to overtime protections if they earn less than $55,000 a year.”
The proposed new salary basis threshold would be based on the 35th percentile of earnings of full-time salaried workers in the lowest wage region, which is currently the South. The current salary basis threshold is based on the 20th percentile of weekly earnings of full-time salaried workers in the lowest wage region. The salary threshold for highly compensated employees is proposed to increase to $143,988/year from $107,432/year. The proposed increase for highly compensated employees represents the 85th percentile of full-time salaried workers nationally, which would be an increase from the current 80th percentile. The DOL regulations provide that receiving a high level of compensation “is a strong indicator of an employee’s exempt status, thus eliminating the need for a detailed analysis of the employee's job duties.” Highly compensated employees qualify for an exemption if they regularly perform at least one of the exempt duties enumerated in the regulations.
The proposed rule would automatically update the earnings thresholds every three years in order to keep pace with changes in worker salaries. The proposed rule would not make any changes to the duties that employees would need to meet in order to be considered exempt. Comments on the proposed rule would need to be submitted by early November. In urging the public to submit comments, Jessica Looman, Principal Deputy Administrator, Wage and Hour Division, stated that “Public input is essential as we consider the needs of today’s workforce and industry demands…”
Congress Returns to Busy September Schedule – The U.S. Congress returned to session from its annual August recess and has a limited number of days in which it will be in session to complete work on the twelve appropriations bills funding the federal government during the fiscal year that starts on October 1st. So far, the House of Representatives has passed one of the appropriations bills and the Senate has not yet passed any. Following passage by each chamber, any differences between the bills need to be negotiated and a final vote taken by each house before the bills can be sent to President Biden for his signature. The last time Congress finished work on all of its appropriations bills by the start of the fiscal year was 1997. It’s likely that to avoid a partial government shutdown, Congress will need to agree to a continuing resolution that funds the federal government for a limited amount of time.
EEOC Adopts New Strategic Plan – The Equal Employment Opportunity Commission (EEOC) has released a new strategic plan for fiscal years 2022 – 2026. According to EEOC Chair Charlotte A. Burrows, the new strategic plan “emphasizes expanding the EEOC’s capacity to eliminate systemic barriers to equal opportunity in the workplace, using technology and other tools to improve our services to the public, and achieving organizational excellence with a culture of accountability, inclusivity, and accessibility.”
EEOC identified the following highlights from the new strategic plan:
NLRB Finalizes Rule Amending Procedures for Representation Elections – The National Labor Relations Board (NLRB) approved a final rule that amends its procedures concerning representation elections. The rule, according to the NLRB, is designed to reverse amendments that were made in 2019, which the current Board believes resulted in election process delays. Lauren McFerran, NLRB Chair noted that under the National Labor Relations Act, representation cases should be resolved quickly and fairly, and this rule would remove unnecessary delays, thus allowing “workers to more effectively exercise their fundamental rights.”
The NLRB highlighted the changes made by the new rule that would result in pre-election hearings beginning more quickly, ensuring that election information is provided to employees more rapidly, making before and after election hearings more efficient, and ensuring that elections are held more quickly. The new rule will apply to representation petitions filed on or after December 26, 2023.
Treasury Issues Report on Financial Benefits of Unions – The U.S. Treasury Department released a report titled “Labor Unions and the Middle Class” that is designed to highlight the impact that labor unions have on the economy. According to the Treasury Department, unions raise the wages of their members by 10 – 15% and also improve fringe benefits that are provided to employees. Additionally, the Treasury Department found that unionization can lead to increased wages at nonunion organizations. Finally, unions can lead to increased productivity that results from improved working conditions and giving experienced workers additional say into decisions that lead to more cost effective work processes.
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues, and an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.