Department of Labor Proposes Increased Minimum Salary for Overtime-Exempt Status Under the FLSA

Last week, the U.S. Department of Labor (“DOL”) proposed an increase to the salary threshold required for executive, administrative and professional workers to qualify for overtime exemptions under the Fair Labor Standards Act (“FLSA”).  Currently, the minimum annual salary figure required to qualify for such “white collar” exemptions is $23,660; that number is now expected to increase to $35,308 per year, or $679 per week.  While the increase is substantial, it remains lower than the approximate $47,000 minimum salary proposed near the end of the Obama era.  In addition, the DOL has also proposed an increase to the FLSA’s highly-compensated employee exemption from $100,000 to $147,414.

There will be a 60 day window for the public to provide the DOL with comments about the proposed rules.  Once the rules go into effect, or some modified version thereof, employers will need to review their employment and payroll records to determine which employees may no longer qualify under the prior exemption thresholds and would therefore be entitled to overtime pay.  Alternatively, employers may decide to increase salaries for those newly non-exempt individuals so as to bring them back above the exemption line.  In either event, the DOL’s proposed rules will clearly have a significant impact on employers’ hiring, staffing and payroll decision-making.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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