Labor Department finalizes ICBA-opposed overtime rule

The Labor Department issued a final rule to increase the number of employees who are entitled to overtime compensation.

Details: Issued under the Fair Labor Standards Act, the final rule:

• Will raise the minimum salary threshold to $43,888 on July 1 and then to $58,656 on Jan. 1, 2025, replacing the current salary threshold of $35,568.

• Will adjust the threshold for “highly compensated employees” to $132,964 on July 1 and then to $151,164 on Jan. 1, 2025, from the current threshold of $107,432.

• Will adjust salary thresholds every three years starting July 1, 2027.

ICBA Opposition: In a comment letter on the proposed rule, ICBA said the change:

• Would far outpace the rate of inflation and be unduly burdensome to small businesses.

• Could force community banks to reduce staff, shorten business hours, curtail services, close branches, and reduce employees’ hourly pay.

• Likely exceeds the department’s legal authority because it would arbitrarily require millions of employees who work in bona fide executive, administrative, or professional roles to be paid overtime.

Background: The Labor Department in 2019 issued an overtime final rule that was based on its 2004 overtime methodology, as advocated by ICBA. That final rule—which came after a federal judge in 2017 struck down a rule issued in 2016—increased the salary level test from $23,660 to $35,568 per year and the total annual compensation level for "highly compensated employees" from $100,000 to $107,432 per year.

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