Here We Go Again? DOL Secretary Walsh Discusses Raising Overtime Exemption Salary Threshold

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Bradley Arant Boult Cummings LLP

You may have missed it, but Secretary of Labor Marty Walsh perked up some ears last week when he discussed possibly raising the FLSA salary threshold for certain exempt employees.  In testimony before a Congressional committee, Secretary Walsh stated that the current amount, $35,568, is “definitely” too low and hinted that his department may seek an increase.

What Is the Threshold?

Under the FLSA, workers who make under the threshold cannot be qualified as exempt under the executive, administrative and professional exemptions and must be paid time and a half for every hour they work over 40 hours in a week. Under current regulations, if a worker makes under $684 a week (roughly just over $35,000 a year), even if they meet the other requirements for the exemption, they must be paid overtime.

Didn’t We Just Do This?

Some may remember that raising this threshold garnered a good bit of attention at the end of the Obama administration and throughout the Trump years. The threshold had last been changed in 2004 when it was raised to $23,660. President Obama’s staff proposed a raise of over $20,000, but litigation and fights over the proposed rule stymied any change. In 2019, Trump’s DOL ended up with a rule raising the limit to $35,568. During this process, there was a lot of discussion about why the standard hadn’t changed regularly along with changes in salaries and the cost of living.

What Does Walsh Want?

While Secretary Walsh didn’t specifically give a number where he believes the threshold should be, he did state in his committee testimony that he believes the current level is not high enough. This comment is notable in relation to a recent letter from some House members who are proposing that the level be raised to $80,000 per year and should be regularly reviewed. While there is no proposed rule to change it at this time, this may indicate some sort of initiative in the near future.

Do Employers Need to Do Anything Right Now?

Employers should continue to follow the current rule that has the threshold at $35,568 per year. If you have employees that make below that threshold, they cannot be classified as exempt and need to be paid hourly. As we typically encourage, a regular self-audit of your payroll is a good idea to make sure that all your employees are properly classified. And watch this space for any future updates to the threshold.

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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