DOL Drops a Bomb … Err, the New Salary Threshold—$35,308!

Jason E. Reisman

Don’t say I didn’t tell you so—you read it right here on Monday: the new Fair Labor Standards Act (“FLSA”) white collar exemption salary threshold was just about to hit the street. And, guess what?

It’s arrived—just last night—and our D.C. sources (that is, BR’s “deepthroat”) from Monday’s blog were right on point, missing the final threshold number by only $308.

The Department of Labor (“DOL”) announced a Notice of Proposed Rulemaking (“NPRM”), which sets the new salary threshold that purports to make overtime pay available to another one million American workers. Remember, the last time the salary threshold was updated was in 2004, under the George W. Bush administration, which increased the threshold to $23,660 (or $455/week). Then, the Obama administration proposed to increase it to $47,476 (or $913/week)—yikes! No worries, though, a federal judge in Texas—appointed by President Obama, no less—struck down that proposed salary threshold. With the new Trump administration coming on board and promising to issue a new rule, the appeal of the Texas judge’s decision was placed on hold.

And, now, here we are: After collecting extensive public input from six “listening sessions” it conducted around the United States and reviewing more than 200,000 comments received in response to its 2017 Request for Information, the DOL has proposed the following:

  • Annual salary threshold increasing to $35,308 (projected for 1/1/20).
  • Boosting the weekly salary level from $455 to $679.
  • No automatic periodic updates (whew!). Instead, the rule proposes updates every four years but only via another rulemaking (yep, another NPRM with a public notice-and-comment period—a sure way to be certain that nothing happens too fast).
  • No changes to the current “duties tests.”
  • Allowing non-discretionary bonuses and incentive compensation to be used to satisfy up to 10 percent of the salary level.
  • Substantially increasing the minimum annual compensation required for the “highly compensated employee” exemption from $100,000 to $147,414 (though I’m not sure how many employers are using this exemption).

If you’re bored, see the full NPRM here, as there is a ton of fun in all 219 pages!

This NPRM is open for public comment for 60 days, after which the DOL will review every comment and publish a final rule, likely by the beginning of 2020. Not to worry, they will be scrambling down there in D.C. to get it published in final form to minimize the risk that a 2020 loss of the White House to the Democrats results in the rule being overturned under the Congressional Review Act (What’s that, you say? It’s a story for another day—all about “legislative days” and “dog years.”) Stay tuned for more as this process continues to unfold!

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