U.S. Department of Labor Proposes to Raise the Exempt Salary Threshold
On August 30, 2023, the United States Department of Labor (“DOL”) announced a proposed rule that would significantly increase the minimum weekly salary to qualify for the Fair Labor Standards Act (“FLSA”) white collar exemptions.
The minimum salary would increase from $684 per week (the annual equivalent of $35,568) to $1,059 per week (the annual equivalent of $55,068). The salary rate would continue to be automatically adjusted every three years.
In addition, the DOL proposed an increase in the salary threshold for the “highly compensated employee” from $107,432/year to $143,988/year (a nearly 34% increase), also with automatic updates every three years.
According to the DOL, the proposed rule would do the following:
Restore and extend overtime protections to low-paid salaried workers.
Give workers who are not exempt executive, administrative or professional employees valuable time back.
Prevent a future erosion of overtime protections and ensure greater predictability.
Restore overtime protections for U.S. territories.
Once the DOL publishes the proposed rule, entitled, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” in the Federal Register, the rule will be open for public comment for 60 days.
While it is unclear as to whether the proposed rule will be implemented, this may be a time for employers to proactively consider the impact of the potential adoption of the rule. In addition, it would be beneficial to review job descriptions and duties to ensure employees are properly classified as exempt.
We will continue to follow developments of the proposed rule and will keep you apprised of same. Should you have any questions, please contact Ali Law Group.
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