On March 7th the Department of Labor issued a long expected proposed rule change on the salary-level threshold for exempt or “salaried” employees. Under the proposed rule, the salary threshold for exempt employees would increase from the current level of $23,660 to $35,308, meaning that fewer employees would qualify as exempt from overtime requirements. The exemption threshold for “highly compensated employees” (i.e. employees generally deemed exempt based on their high level of compensation) would also increase from $100,000 per year to $147,414 per year. This proposal is significantly lower than the threshold of $47,892 mandated in the 2016 Obama-era proposal, which was blocked by a federal court. Unlike the 2016 Rule, this new proposal does not provide for automatic inflation adjustments. It also would not alter the current “duties” tests for exempt employees, nor change certain industry-specific overtime protections, such those impacting emergency services personnel and in the construction industry. The DOL has provided a 60-day public comment period for individuals, employers, or other interest groups to offer input prior to the Agency taking final action. Additional information may be found on the DOL’s website at: www.dol.gov/whd/overtime2019/index.htm.
Employers should take this opportunity to review and audit their payroll practices to determine what changes would be required should this proposed rule become final. Although the change in salary is more incremental than the 2016 version, statistics show that it may significantly impact pay practices in a variety of industries including the non-profit, retail, and service industries, just to name a few. The attorneys of Sands Anderson’s Labor and Employment Team will continue to monitor DOL action on this proposed rule and stand ready to assist businesses of all sizes that require guidance.