DOL Seeks to Change Exempt Salary Threshold

Foley & Lardner LLP

Foley & Lardner LLP

Employers of salaried workers beware — you may soon have to give raises to members of your workforce in order to keep them exempt from overtime entitlement. 

On August 30, 2023, the U.S. Department of Labor (DOL) announced a notice of proposed rulemaking to increase the salaried basis threshold for the “white collar” exemptions under the Fair Labor Standards Act (FLSA). Currently, the salary threshold to be considered a white collar exempt employee is $684/week, which is equivalent to $35,568 annually. 

(Remember, the salary minimum is only half of the analysis — keep in mind that, in order to be properly deemed exempt, employees must also satisfy the relevant “duties test” under the FLSA.)

The new proposal from the DOL increases the minimum weekly salary amount to $1,059, which is the equivalent of $55,068 annually. The DOL also seeks to increase the annualized salary threshold for the exemption for “highly compensated employees” (HCE) from the current $107,432 per year to $143,988 per year. 

As part of its proposal, the DOL also seeks to have these amounts increase automatically every three years, based on available wage data. The intent with the automatic updates is accurately reflecting changing economic conditions going forward.

The DOL’s intent with this increase is to restore overtime protection to an additional 3.6 million workers who, based on earnings, would no longer qualify as an exempt employee. The DOL last raised the threshold in 2019, but before that had not implemented any increases after 2004.

This is a proposed rule, and the DOL will accept comments to the proposal for sixty days following its official publication of the proposed rule, which will take place on October 30, 2023. 

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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