DOL Proposes Increase to the Salary Exemption Threshold

By: Liam McMillin and Tommy Rogers*

This week, the Department of Labor (DOL) proposed an increase to the Fair Labor Standards Act’s (FLSA) annual salary threshold from $35,568 to $55,068. The proposed rule could require overtime pay for considerably more workers than under the current law, or would require employers to increase salaries to meet the threshold.

But nothing has changed yet. We’re still in the early days.

Current Law

U.S. wage law generally requires employers to pay eligible workers one and one-half times their regular rate of pay when they work more than 40 hours in a week. There are some exemptions, however, if the employee meets the specified salary threshold and meets one of the exemption categories, usually based on the type of work the employee performs. The current salary threshold is about $35,500 per year. “Highly compensated” workers are generally exempt if they earn more than $107,432 per year.

What’s New?

In addition to raising the annual salary threshold from $35,568 to $55,068, the proposed rule would raise the “highly compensated employee” annual salary threshold cutoff from $107,432 to $143,988. Under the proposal, the salary thresholds would also automatically increase every three years to reflect changes in average earnings. The rule would not change the other requirements for an employee to be considered exempt, just the salary threshold.

What Should an Employer do?

In a word, nothing. The proposed rule first goes through a 60-day public comment period. Then, even if the proposed rule is adopted, the rule will very likely see challenges in court; this is what happened in 2016 when the proposed rule attempted to raise the salary level to over $900 per week. A federal judge in Texas blocked the rule from taking effect, and the DOL stopped pursuing the rule at that time.

So, sit tight -- nothing has changed yet, and any final rule, if passed, could look very different from this current proposal.

As always, we will continue to monitor developments, and Bricker Graydon’s Labor & Employment attorneys are here to assist with any questions or concerns you have regarding overtime pay and other employment laws.

*Tommy Rogers is a law clerk and not licensed to practice law.

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