The Wait is Over: DOL Issues New Minimum Salary Threshold for White Collar Exemptions
Employers have been waiting for the U.S. Department of Labor (“DOL”) to respond to the injunction halting the implementation of its 2016 proposal increasing the minimum salary threshold for the white collar exemptions. On March 7, 2019, the DOL issued its replacement proposal to the minimum salary requirement, raising the current $23,660 annual salary requirement to $35,308 annually (i.e., $679 weekly). This increase is in line with feedback presented at the DOL listening sessions and consistent with predictions of where the DOL would land on the salary increase.
As a reminder, in 2016, the DOL proposed an increase that would have more than doubled the Fair Labor Standards Act’s (“FLSA”) minimum salary threshold for the white collar exemptions from $455 per week (i.e., $23,660 annually) to $913 per week (i.e., $47,476 annually). On November 22, 2016, a federal judge in Texas issued a nationwide injunction halting implementation of the DOL’s proposed rule.
Appeals followed; however, the DOL eventually indicated that it intended to revisit the increase. In the fall of 2018, the DOL held numerous listening sessions to receive public feedback regarding the minimum salary requirements.
In addition to this proposed increase, the DOL is seeking public comment regarding its proposed language concerning automatic increases to the salary threshold. Under the newly proposed rule, periodic increases would only be implemented after notice-and-comment periods. The automatic increases (without notice-and-comment) included in the 2016 proposed rule were a factor that led to injunctive relief being granted
It is estimated that this new increase will result in over a million workers being reclassified as non-exempt and, thus, entitled to overtime. While the salary increase certainly impacts fewer workers than the 2016 proposed increase, employers should work with experienced counsel to evaluate modifications (including pay adjustments or reclassification) to blunt the impact of the new rule on labor budgets and operational capabilities.
As always, we will continue to monitor developments regarding these new rules and will keep you updated.