Department of Labor Proposes Increasing the Annual Salary Threshold for “White Collar” Exemptions
The U.S. Department of Labor (“DOL”) recently released a Notice of Proposed Rulemaking that would increase the salary threshold for the “white collar” executive, administrative, and professional exemptions from the Fair Labor Standards Act’s (“FLSA”) overtime rules. The DOL predicts that more than 3.6 million workers will become eligible for overtime under the proposed rule.
The FLSA’s white collar exemptions apply if an employee performs certain duties and earns at least a set minimum guaranteed salary. Currently, the salary requirement is $684 per week ($35,568 per year). For “highly compensated employees,” who currently earn at least $107,432 per year, the duties requirements are relaxed. If the proposed changes go into effect, the minimum salary threshold will increase to $1,059 per week ($55,068 per year), and the highly compensated threshold will increase to $143,988 per year. The proposed rule would also incorporate automatic adjustments of the salary levels every three years to reflect current earnings data. The one bright spot for employers is that the proposed rule does not include any changes to the “duties” tests for determining whether one of the exemptions is satisfied.
The proposed rule is subject to a sixty-day comment period and then must go through various administrative steps before going into effect. If the rule survives anticipated court challenges, it is expected to become effective sometime in the summer of 2024. Over the coming months, employers should review their current employees’ salaries and duties to prepare proactively for the potential implementation of the proposed rule.
If you have any questions about the proposed rule, please contact one of Honigman’s Labor and Employment attorneys.