On August 30, the Department of Labor (DOL) issued a Notice of Proposed Rulemaking, with an aim to revise the white-collar exemption salary thresholds under the Fair Labor Standards Act (FLSA). The proposal seeks to increase the salary threshold, i.e., the amount an executive, administrative, or professional employee must earn to potentially qualify as exempt, from $35,568 to $55,068 per year.
In addition, the proposed rule would also increase the highly compensated employee salary threshold from $107,432 to $143,988 per year. Moreover, it is outlined in the proposal that there would be an introduction of an automatic adjustment to these thresholds, which is expected to reflect changes in wage and salary levels.
The full text of the notice outlines that this rule change is part of an ongoing effort by the DOL to assure that FLSA’s intended overtime protections are fully implemented, and to simplify the identification of overtime-exempt employees, thereby ensuring compliance from the employers.
The proposed rule is likely to have significant implications for corporations and law firms, likely requiring them to audit their current compensation and classify who might be affected. This might involve adjustments in salary levels or work hours to maintain compliance. Those legal professionals who are well-versed in employment law and wage & hour rules will be critical in assisting during this transitional phase.
As this proposed rule is still in the comment period, organizations are encouraged to submit remarks and concerns to the DOL. These inputs, once reviewed, might potentially bring changes to the final version of the rule.