DOL Proposes Increase to FLSA Exemption Threshold

DOL Proposes Increase to FLSA Exemption Threshold

DOL, FLSA
March 8, 2019

On March 7, 2019, the Department of Labor released its long-promised proposed rule raising the minimum salary threshold required for workers to qualify for the Fair Labor Standards Act’s exemption threshold to $35,308 annually.  Based on a 40-hour work week, the increase equates to about a $17.00 per hour rate.  The new rule would apply to executive, professional, and administrative workers—also known as"white collar" exemptions.

The new threshold is an $11,648 increase from the current threshold of $23,660, but is about $12,000 lower than the Obama administration’s threshold.  The Obama administration’s rule was enjoined by a Texas federal judge and the Trump administration withdrew the government’s appeal which sought to enforce the rule.

The proposed rule includes another key provision:  regular increases to the threshold every four years, following public comment.  The opportunity for public comment is important because it will allow for the DOL to consider the impact on employers during the prior period, as well as the impact moving forward before making any adjustment.

The DOL estimates that implementation would begin in January 2020, giving employers ample time to adjust salaries upward or switch employees from salary to hourly.  While it is difficult to predict whether there will be a challenge, it is likely that the proposed rule would survive such a challenge based on the current state of the economy and more modest nature of the increase when compared with the Obama-era rule.  Additionally, the rule is closely in line with states and municipalities that have raised the minimum wage to $15.00 per hour.  The DOL estimates that the proposed rule would make one million more workers eligible for overtime pay.

Once the proposed rule is published in the Federal Register, it will be subject to a 60-day public comment period.