The Fair Labor Standards Act (FLSA) has been the subject of much debate in recent years, especially regarding the salary threshold for overtime eligibility. Until 2020, the threshold was set at $23,600. In January 2020, the Department of Labor (DOL) raised the salary threshold to $684 per week or $35,568 per year. Now, just three years later, the DOL is expected to propose another increase but it is currently unclear how far the increase will go.
With most employers already dealing with new work expectations, staffing challenges, increased costs, inflation, among other issues, many employers are having to redefine how they structure their business, retain and attract talent, and discover new revenue streams. It is essential for employers to understand the potential impact of the proposed increase, as it will undoubtedly present heightened labor costs for many employers.
In 2021, four congressional Democrats argued for a threshold in line with the “historical high point of salary thresholds—the 55th percentile of earnings of full-time salaried workers nationwide.” That would result in a threshold of $82,732 by 2026, according to the letter. As history has demonstrated, change is expected, and employers need to prepare for managing and mitigating the impact of that change.