By John Arnold, Peter Moser, Catherine Reuben September 8, 2023
On August 30, 2023, the United States Department of Labor (DOL) proposed a new rule that would increase to $1,059 the minimum weekly salary level needed for an employee to qualify as an Administrative, Professional or Executive employee, exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). The current minimum salary level is $684 per week ($35,568 annually). For so-called “highly compensated employees”, i.e., those employees for whom the FLSA duties test is easier to meet given the employees’ relatively high compensation, the requisite annual salary would be increased from the current level of $107,432 to 85 percent of the earnings for full-time salaried workers nationwide, which, based on current data, would be $143,988 per year, of which at least $1,059 per week would have to be paid on a salary or fee basis.
The final salary numbers will be based on governmental earnings data applicable as of the date the new rule goes into effect, so the above numbers may increase. In addition, the DOL’s proposed rule would impose automatic increases every three years based on updated governmental earnings data.
The new salary levels would apply not just to the 50 states but also to most U.S. territories including Guam, Puerto Rico, and the U.S. Virgin Islands (the salary level required in U.S. territories has not been increased for almost 20 years).
Readers will recall that the DOL made a similar effort under the Obama Administration to raise the annual FLSA salary level to $47,476. That effort was eventually blocked by the courts shortly before the rule’s implementation date. No doubt the DOL’s new proposed rule will face similar legal challenges. Once the DOL formally publishes the proposed rule in the Federal Register in the coming days, a 60-day comment period will follow during which any interested parties may submit written comments addressing it.
Although the future of the DOL’s new proposed rule is unclear, employers are well advised to nevertheless review the salary levels of their exempt positions. In many areas of the country, even under current law, if an employee earns a salary lower than $55,000 per year it could
be a commonsense indicator that the employee’s duties may be subject to challenge as
lacking the requisite high level of judgment and authority needed to satisfy the duties test for
an FLSA exemption.
For Questions / More Information
To discuss how the proposed rule could affect your organization, please contact your HRW
attorney:
