DOL Proposes to Move FLSA Salary Threshold to $35,308


Yesterday, the Department of Labor (“DOL”) issued a much anticipated Notice of Proposed Rulemaking (“NPRM”) proposing to increase the salary threshold for the so-called “white collar” exemption from the minimum wage and overtime requirements of the Fair Labor Standards Act (“FLSA”) applicable to “bona fide” executive, administrative, professional, outside sales, and computer employees. The proposal would increase the salary level almost 50% - from $455 to $679 per week ($35,308 on an annualized basis) and would allow the inclusion of certain nondiscretionary bonuses and incentive payments (including commissions) to count towards up to 10 percent of the salary level provided they are paid at least annually. The NPRM does not provide for automatic adjustments of the salary threshold but announces the DOL’s intention to review the salary threshold every four years through notice-and-comment rulemaking, soliciting comment from the public. The DOL also proposes to update the total annual compensation requirement for the “highly compensated employee” test to $147,414. 

The salary basis was last addressed in 2016 when the DOL proposed increasing the weekly salary level from $455 ($23,660 per year) to $913 ($47,476 per year). That rulemaking was successfully challenged in the U.S. District Court for the Eastern District of Texas and the regulation never went into effect. 

More information about the proposed rule is available here. Members of the public may submit comments to the proposal in the rulemaking docket RIN 1235-AA20 within 60 days of the publication of the rule in the Federal Register.  

This blog was written by Merrell Renaud at Miles & Stockbridge.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.