Status

On Nov. 7, ABC submitted comments to the U.S. Department of Labor in opposition to a proposed rulemaking that would alter overtime regulations under the Fair Labor Standards Act. 

ABC called on the DOL to withdraw the new proposed rule, which is unlawful, inconsistent with historic norms and will specifically harm small businesses. ABC has consistently told the DOL that there is no compelling reason for an adjustment to the minimum salary threshold for exemption since it was increased roughly four years ago. Most importantly, the DOL should recognize that the construction industry, as well as multiple other industries, is currently up against increased geopolitical uncertainty, high materials prices, inflationary pressures and workforce shortages. Specifically, ABC estimates that the construction industry needs to hire more than half a million workers in 2023 alone. Regrettably, the DOL’s proposed salary level increase will further complicate the current economic outlook. Read ABC’s news release about the proposed rule.

Under the proposed rule, it is expected that the minimum salary threshold will be at least $55,068 (annualized). However, when the DOL promulgates the final rule, the agency claims it will use the most recent data then available. Thus, the DOL projects the minimum salary threshold to be $60,209 (annualized) in 2024—an increase of nearly 70% from the current $35,568 salary level.

The DOL also proposes to significantly raise the total annual compensation needed to qualify for exemption under the streamlined test for highly compensated employees from the current total annual compensation of $107,432 to $143,988.

Finally, the DOL proposes to automatically update the standard salary level and the HCE total annual compensation threshold every three years.

In 2016, the Obama administration issued a final overtime rule that would have doubled the minimum salary level for exemption from $23,660 to $47,476 per year. ABC, along with several other business groups, sued the DOL in federal court and succeeded in blocking the rule from taking effect.

Desired Outcome

ABC urges the DOL to withdraw the new overtime proposal. There is no immediate compelling reason to alter the current minimum salary threshold since it was adjusted in 2019. Further, and most importantly, the DOL should recognize that the construction industry is currently up against high materials prices, inflationary pressures and workforce shortages. Regrettably, the DOL’s proposed salary level increase will further complicate the current economic situation. Moreover, because the DOL proposes to automatically increase the salary level every three years, these issues will recur repeatedly.