The Labor Department’s long-awaited proposal to expand overtime eligibility is heading to the White House’s Office of Information and Regulatory Affairs, sources familiar with the rule told Bloomberg Law. This is the first step of regulatory review before a proposal can be released to the public for comments.

A new overtime eligibility policy has been the biggest issue at the DOL since Secretary Alexander Acosta took office in 2017. A rule was scheduled for release in March in the latest regulatory agenda, but the government shutdown could affect the actual publication of the proposal.

About a third of full-time employees...