Department of Labor – New Rule Proposal Related to Salary Threshold
As many employers may recall, in 2016 the United States Department of Labor (“DOL”) under President Obama considered raising the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt from the Fair Labor Standards Act’s (“FLSA”) overtime rules. The proposed rule, which was slated to go into effect on December 1, 2016, would have raised the minimum salary level for exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The proposed rule also sought to automatically adjust the salary threshold every three years. However, shortly before it was set to take effect, a Texas federal court issued a preliminary and permanent injunction preventing the proposed rule’s implementation.
On March 7, 2019, the DOL under President Trump proposed a new version of the rule seeking to increase the minimum salary threshold for exempt employees to $679 per week ($35,308 annually). This proposal does not include the automatic adjustments contemplated under the prior proposal. The DOL is currently seeking public comments on the proposal, but most in the employment law realm expect some version of it to be implemented in the near future.
Should the DOL increase the minimum salary threshold as expected, employers need to be prepared to either (1) begin paying some previously salaried employees overtime or (2) increase their salaries to the minimum threshold ($35,308). REMINDER: Please remember that, even though an employer may pay an employee the minimum salary identified above (or more), an employee may still be eligible for overtime pay depending on the employee’s actual job duties. An employee’s primary job duties must involve the kind of work exempted under one or more categories outlined within the FLSA or its regulations (e.g., executive, administrative, etc.).
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