By: David Keating

On March 7, 2019, the U.S. Department of Labor (DOL) published an updated proposed rule which would raise the annual minimum salary requirements related to “white collar” overtime exemptions of the Fair Labor Standards Act (FLSA).  The DOL proposes increasing the standard salary level to $679 per week, $35,308 annually.  The current standard salary level is $455 per week, $23,660 annually.  All employees not paid the new standard salary level will be deemed non-exempt under the FLSA.

The new proposed standard salary level represents a significant departure from the final rule issued by the DOL in 2016, which was enjoined by a Texas district court, which sought to increase the exempt salary threshold to $913 per week, $47,476 annually. 

Under the new proposed rule, the annual compensation to qualify for FLSA’s “highly compensated employee” (HCE) exemption would increase to $147,414, of which $679 must be paid weekly.  Today, to qualify for the HCE exemption, an employee must be paid at least $100,000, of which $455 must be paid weekly.

The proposed rule allows employers to include non-discretionary bonuses, incentive payments and commissions to satisfy up to 10% of the standard salary threshold.  The 10% may be paid annually.

The DOL’s proposal does not include automatic future increases.  It does suggest a commitment to a periodic review every four years subject to the notice-and-comment rulemaking process.

The DOL does not propose any changes to the duties test.

The proposed rule is pending publication in the Federal Register.  Following publication, the public will have 60 days to submit comments to the DOL.

If you have any questions regarding the proposed rule and how it may impact your business, please contact me or another attorney at Lindner & Marsack, S.C.