03/08/2019

OSAE Law Alert: DOL Proposes New Salary Threshold for Exempt-status Employees

On March 7, 2019, the U.S. Department of Labor (DOL) announced its long-awaited proposed rule to update the salary threshold to be met for exempt status under the so-called White Collar Exemptions (executive, administrative, professional, outside sales and computer employee). Since 2004, the salary threshold for exempt status in these positions has been $455 per week ($23,660 annually).

In the Notice of Proposed Rulemaking (NPRM) announced yesterday, the salary threshold would be raised to $679 per week ($35,308 annually). The NPRM also proposes to: (1) allow the inclusion of nondiscretionary bonuses and incentive payments to count towards up to 10 percent of the standard salary level; (2) update the total compensation requirement for the “highly compensated employee” test; and (3) on a going forward basis, update these earnings thresholds every four years.

The NPRM formally rescinded a 2016 Final Rule that established a substantially higher salary threshold, which a federal court later enjoined. The proposed rule is not yet final and once the NPRM is published in the Federal Register, the public will have 60 days to submit comments. Those interested in submitting comments about the proposed rule may do so electronically at https://www.regulations.gov in the rulemaking docket RIN 1235-AA20. The department, after considering public comments, will issue a final rule that may or may not modify this proposed rule.

In the meantime, employers are urged to plan ahead and consider whether this new salary threshold will impact the exempt status of current employees.