The Department of Labor Proposed to Significantly Raise the Minimum Salary Requirements for Certain Exempt Employees (Again!)

No, this is not an old article from 2016. But it does revisit a hot topic from just over two years ago that had the business community clambering. As most employers recall, a little over two years ago owners, managers, and human resource personnel were bracing for the Department of Labor's ("DOL") much anticipated revision of overtime rules that were set to affect millions of employees currently classified as exempt under the federal Fair Labor Standards Act's Executive, Administrative, or Professional exemptions, commonly referred to as the "white collar exemptions."

As a quick refresher, the DOL's overtime rules were to go into effect on December 1, 2016 and would have more than doubled the minimum salary basis employers had to pay certain employees in order to continuing classifying them as exempt from the FLSA's minimum wage and overtime requirements. As many also may recall, the 2016 overtime rules never went into effect because of two primary reasons: (1) a federal judge in Texas ordered an injunction; and (2) there was change from the Obama administration to the Trump administration.

Now, a little over two years later DOL is continuing its quest to revise the overtime rules, this time under the Trump administration. Just recently the DOL issued a Notice of Proposed Rulemaking, and as with the 2016 rule, the newly proposed rule continues to focus primarily on the minimum salary basis requirement necessary to classify an employee as exempt under the "white collar exemptions."

Specifically, the new rule proposes to raise the minimum salary requirement from the current $455.00 per week to $679.00 per week ($35,308.00 per year). While this is significantly less than the 2016 proposal of $913.00 per week, it still acts as a substantial salary increase for employers to consider when reviewing employee exemption status. The proposed rule also retains many of the characteristics of the 2016 rule, such as raising the minimum salary requirement for highly compensated employees, and providing a mechanism that would allow the DOL to review and adjust the minimum salary levels on a regular basis, in this case every four years.

At this point the DOL is in the process of seeking comments on the proposal and has not yet submitted the official proposal for publication in the federal register. However, once the proposed rule is officially published the public will have 60 days to provide those comments to the DOL for consideration. After this comment period employers can expect the DOL to issue a final rule along with a compliance date by which the rule must be implemented in the workforce. For specific information you can click here: https://www.dol.gov/whd/overtime/FSOT2019.pdf

To be clear, the proposed rule is not yet published, final, or effective, but it does give employers a good idea of what will likely be coming in the not so distant future. Therefore, from a practical perspective, employers should again start evaluating a number of issues related to its workforce. For example, discussions should take place on how to handle currently exempt employees that may no longer qualify as exempt if the proposed rule goes into effect. Discussion should also focus on any policies or procedures that might need to be modified or amended in anticipation of upcoming changes. Like any government regulation, the devil is in the details and any final rule is sure to be blanketed with caveats and other administrative and logistical requirements necessary to ensure complete compliance.

For questions regarding the proposed rule, or to evaluate a strategy regarding problematic employee classification issues, contact any of the Quinlivan & Hughes employment attorneys Chad, Melinda, or Ron by email or by phone at (320) 251-1414.

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