IT’S BACK:  DOL PROPOSES A MORE PALATABLE SALARY LEVEL INCREASE FOR FLSA OVERTIME EXEMPT EMPLOYEES

Kathy Speaker MacNett, Esq.

Managing Member

March 12, 2019

On March 7, 2019, the US Department of Labor (DOL) issued the new proposed salary threshold regulations for overtime exempt employees in the Executive, Administrative and Professional (EAP) categories under the Federal Fair Labor Standards Act (FLSA).  The new threshold is $35,308annually or $679 weekly.  The increase is from $23,660 annually and $455 weekly, respectively.  Although the proposed increases are sizable, the increases are scaled back from the figures the DOL finalized for implementation in December 2016 of $47,476 annually or $913 weekly.  Those 2016 regulations were challenged and a federal court halted implementation.

The proposed increases are expected to apply to some 1.1 million workers in the United States, but do not apply to doctors, lawyers, teachers, outside sales persons, academic administrators, computer employees, and those in the motion picture industry.  Special rules apply to employees in those categories.

Under the new proposal, only 10% of this salary threshold may be satisfied by non-discretionary or incentive payments based on productivity or other factors.

In addition, the proposed threshold for exempt highly compensated employees is increased from $100,000 to $147,414, annually. 

The DOL’s decision to exclude any automatic increase in the salary thresholds in prospective years is significant.  That provision was the subject of considerable controversy in the last version of the regulations.  However, the DOL has announced that it plans to adjust the salary thresholds every four years in the future through the rulemaking process.  Further, this proposed rulemaking does not increase the federal minimum wage of $7.25 per hour.

This rulemaking process is in its early stage.  There is a 60-day period ending on May 6, 2019 for interested parties to file comments with the DOL.  That comment period may or may not be extended by the DOL.  The effective date of the change, if finalized, has not yet and cannot yet be determined because of the uncertainty of the timing of the Final Rule.  The DOL references the possibility of a 2020 implementation date in its notice.

Please contact ksm@skarlatoszonarich.com if you desire further clarification or wish to file formal comments to the proposed regulations.

Bottom Line:  After multiple attempts, the DOL issued a proposed rule, which if implemented, will impact salaried, exempt overtime employees in the EAP overtime exempt categories.  If finalized, the law will apply to employees covered under either the federal FLSA or the Pennsylvania Minimum Wage Law due to its employee-friendly nature.  For more information, click here:  https://www.dol.gov/whd/overtime2019/.