The U.S. Department of Labor (“DOL”) has issued a Notice of Proposed Rulemaking to increase the salary threshold requirement for employees to be exempt from the Fair Labor Standards Act’s overtime requirements. The proposed rule would increase the salary threshold for employees qualifying as exempt under the executive, administrative, and professional exemptions to $1,059 per week ($55,068 per year). The proposed rule would increase the salary threshold for highly compensated employees to $143,988 per year. The current salary threshold for these exemptions are $684 per week ($35,568 per year) and $107,432 per year, respectively. Employees who earn less than the salary thresholds are eligible for overtime, regardless of their position and job duties.
The proposed rule also includes a provision to automatically adjust the salary threshold every three years using current wage data.
The proposed rule represents an increase in the threshold salary of about 17 percent. If finalized, employers will need to audit their exempt positions, review job duties and hours worked, analyze pay practices, and create a strategy to implement the rule while controling wage costs.
The proposed rule will undergo a 60-day public comment period and DOL will hear testimony and review public comments before finalizing the rule. Interested employers should comment. The DOL has stated that the salary thresholds in the final rule may be different if wage data changes before a final rule is issued. A final rule is expected to come in 2024.