DOL ANNOUNCES PROPOSED INCREASE TO SALARY EXEMPT THRESHOLD; WOULD ENTITLE MORE EMPLOYEES TO OVERTIME
Earlier this week, the Department of Labor (DOL) announced a proposal to increase the salary threshold for exemption from overtime under the Fair Labor Standards Act (FLSA). This proposed increase has been anticipated.
Under the proposed rule, announced on August 30th, the salary threshold for exemption would increase to $1,059 per week ($55,068 annually) for most exempt employees. The salary threshold for highly compensated employees would increase to $143,988 annually, up from $107,432 annually. This would extend overtime coverage to 3.6 million additional workers according to DOL estimates.
Additionally, the proposed rule provides for an automatic update to the salary threshold every three years to match current earnings data. Employers would be provided 150 days notice ahead of any update to the salary threshold to allow them to make the appropriate adjustments.
At this time, no change is proposed for the duties test requirements for exemption from overtime under the FLSA.
Once the proposed rule is officially published in the Federal Register, it will be open for public comment for 60 days. All comments submitted will be considered before publishing a final rule.
It’s important to remember that at this time, this is only a proposal. No increase has been put into place.
As you may recall, the DOL under the Obama Administration proposed an increase the salary threshold back in 2016. That proposed rule would have increased the threshold from $23,600 annually ($455 per week) to $47,476 annually ($913 per week). That proposed increase was stopped by legal challenges. Under President Trump, the DOL proposed and implemented a lesser increase to $35,568 annually ($684 per week) in 2020.
There are already indications that there will be challenges to this latest proposed increase.
Employers should take this time to review their exempt positions to determine which may be affected by the increase if it were to become final and go into effect. For those that would be impacted by this increase, a decision will need to be made as to whether the salary will need to be increased to retain exempt status or need to be re-classified as non-exempt and subject to overtime.
NAE will continue to monitor the latest developments of this proposed salary threshold increase and provide updates as they become available. To ensure you do not miss any updates, join our mailing list.
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