Federal Overtime Rules on Biden Administration’s Regulatory Agenda for 2022

The Biden Administration’s fall 2021 regulatory agenda projects that the Department of Labor (DOL) will revisit before April 2022  the salary level at which an employee could be exempted from federal overtime and minimum wage requirements, as well as address other aspects of the overtime regulatory regime. With so many agencies experiencing staffing shortages and difficulties hiring new, affordable talent, increasing the federal minimum salary threshold could trigger increased overtime requirements for a larger swath of junior level talent, particularly in lower-cost markets. This could negatively impact the predictability of labor expenses and project budgeting for agencies.

On Jan. 25, the 4As along with more than 100 other employer organizations sent a letter to Secretary of Labor Marty Walsh urging DOL to hold stakeholder meetings prior to the development and issuance of its anticipated proposed rulemaking on the “white collar” exemptions to the overtime regulations under the Fair Labor Standards Act. “This will be a significant rulemaking with respect to cost, difficulty in implementation and impact on the workforce, particularly given the current acute labor shortages,” the letter says. “Our organizations urge DOL to follow past precedents and hold meetings with the regulated community to obtain input on the potential impact of any changes to the overtime exemption requirements.”

Taking effect at the beginning of 2020, DOL last updated the overtime threshold in 2019, when it finalized a $35,568 minimum salary for overtime exemptions. This current minimum salary threshold fell short of the Obama Administration’s proposed $47,000 threshold. Any proposed rule would likely include language about regular and automatic updates to this minimum salary threshold, a model used by some states and localities who have their own minimum salary thresholds.

Some Democratic members of Congress are urging DOL to adopt a salary threshold at the 55th percentile of earnings of full-time salaried workers nationwide. This threshold would be at least $82,732 by 2026.