Department of Labor Proposes Increasing Minimum Exempt Pay Levels
The US Department of Labor (DOL) has finally proposed a new rule to update the pay thresholds necessary to satisfy certain “white collar” overtime exemption regulations after its prior rule was rejected by a federal court in 2016. On March 7, 2019, the agency announced the proposed rule, which would increase the minimum salary from $455 weekly ($23,660 annually) to $679 weekly ($35,308 annually) for workers whose duties qualify them for the executive, administrative, or professional exemptions from overtime. The agency also proposes to increase the minimum compensation to qualify for the highly-compensated employee exemption from $100,000 to $147,414 annually. While the proposed new minimum salary is less than the 2016 proposal, the new highly-compensated employee threshold is higher than the prior proposal. The agency estimates the minimum salary increase would make more than one million existing workers eligible for overtime and the increased threshold for highly-compensated employees would make another 200,000 employees eligible for overtime.
Unlike the 2016 iteration of the rule, the new proposal would not include automatic increases to the minimum salary or high compensation threshold. The DOL proposes to revisit the pay levels every four years through the rulemaking process to allow for public comment and a more orderly transition. The proposed rule will be published in the Federal Register very soon and a 60-day comment period will follow. Employers who have exempt employees under the proposed new minimum salary and compensation thresholds will need to follow developments closely and begin considering their options, which may include converting certain exempt employees to non-exempt status or raising pay levels to meet the new thresholds. Keep in mind that pay is only part of the equation for these exemptions—employees must also perform duties that qualify for exempt status under the regulations.
Proposed Rule: https://www.dol.gov/whd/overtime/overtime2019-nprm.pdf