On March 7, 2019, the Department of Labor (DOL) issued a proposed rule revising the Fair Labor Standards Act (FLSA) implementing the exemption from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The proposed rule raises the salary threshold to $35,308 ($679 weekly), up from the current threshold of $23,660 ($455 weekly), which was last updated in 2004.
Unless specifically exempted, workers are guaranteed time-and-a-half pay if they work more than 40 hours in any given week if they make less than $35,308, including up to 10 percent of the standard salary requirement with nondiscretionary bonuses and incentive payments (including commissions), provided these forms of compensation are paid at least annually or more frequently. The proposal also increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $100,000 to $147,414 per year. Rather than proposing automatic adjustments to the threshold levels, the future intention is to propose updates to the earnings threshold every four years through notice and comment procedures. There are no proposed changes to the job duties test.
This proposed threshold is lower than the finalized rule under the Obama Administration that raised threshold level to $47,476. Recall, that final rule was invalidated in November 2016, by the U.S. District Court for the Eastern District of Texas that issued a nationwide injunction prohibiting the rule from going into effect. An appeal to this case was held in abeyance pending further rulemaking by DOL revising the salary threshold. Since then, DOL under the new administration, has been examining changes to the rule, holding numerous listening sessions and issuing a request for information (RFI) that resulted in more than 200,000 comments submitted. The proposed rule was developed in response to that feedback and will be open for comments for 60 days.
While the rule will likely not be finalized until the end of the year at the earliest, employers are encouraged to begin exploring measures to explore compliance with the updated changes. Stay tuned to NAR and the Center for Association Leadership (ASAE) for the latest on this proposed change.