Labor Department Proposes Raising FLSA Overtime Exemption Salary Minimum to $55K

Parker Poe Adams & Bernstein LLP

Parker Poe Adams & Bernstein LLP

Last week, the U.S. Department of Labor (DOL) announced a proposal to increase the salary requirement for employers to claim certain exemptions from the Fair Labor Standards Act’s overtime and minimum wage requirements to $1,059 per week, or $55,068 per year. If the rule is implemented, the salary would be required for positions classified as exempt under the "white collar" executive, administrative, and professional exemptions currently set at $684 per week, or $35,568 per year.

In 2016, DOL proposed increasing the minimum salary to $47,476. This requirement was struck down by a federal district court. Before the appeal on this decision was heard, the Trump administration issued rules reducing the increase to the current level. While the new DOL proposal will certainly face judicial scrutiny — given general wage inflation since 2017 — a new salary level that remains in the bottom half of pay to salaried employees in the U.S. may survive such a challenge.

In addition to raising the salary requirement for the general white collar exemptions, the new DOL proposal would increase the minimum salary for the "shortcut," highly-compensated employee exemption from $107,432 to $143,988. DOL said that this figure is based on the 85th percentile of U.S. salaried workers.

The DOL proposal makes no changes to the duties tests for the white collar exemptions. Even with the increase, this change would primarily affect employers in retail, hospitality, and other industries at the lower end of managerial and related wage scales. DOL is accepting comments to the proposed change for 60 days following publication.

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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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