Federal Government Proposes Raising Overtime Threshold to $55K

On August 30, 2023, the Department of Labor (“DOL”) issued a notice of proposed rulemaking for a rule “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees. If enacted, the rule would guarantee overtime pay for salaried workers earning less than $55,068 a year.

The rule would raise the minimum salary required to invoke the “white-collar” exemption to overtime from the current $684/week ($35,568 annual salary) to $1,059/week ($55,068 annual salary).  Additionally, the highly compensated employee threshold would go up to $143,988 a year.

DOL estimates that this change would impact 3.6 million employees, and create an additional $1.2 billion paid to employees. 

Some states already have a higher threshold for overtime. For example, salaried workers in California are only eligible to be exempted for overtime if they are paid up to $64,480 (twice the state minimum wage).  However, with the federal minimum wage at $7.25 an hour, this rule will have a significant impact on employee overtime protections if enacted.

The rule is still in the proposal stage and is open to comment. These overtime thresholds will not go into effect until the rule is finalized.  However, restaurant employers should be prepared for this change in late 2024 or early 2025. 

In other legal news, the foodservice industry in Texas is operating under a series of new and amended laws that were passed during Texas’ 88th Regular Legislative Session. Among the dozens of new laws that will impact restaurants, major themes include:

• Regulatory consistency and predictability 
• Fewer permit fees
• Clearer health codes 
• Property tax relief
• Workforce development

“After the difficulties restaurants have faced since the COVID-19 pandemic, we started the legislative session with a strong agenda that incorporated feedback from operators across the state,” Kelsey Erickson Streufert, chief public affairs officer of the Texas Restaurant Association, said. “We were determined to deliver immediate relief and long-term security for the entire foodservice industry—from single-unit restaurants to chains, franchisees, employees and customers. Many of these plans take effect with new laws today, creating new opportunities for restaurants and the millions of Texans who depend on them.”