The United States Department of Labor (“DOL”) issued a Field Assistance Bulletin (“FAB”) on June 27, 2025, putting to bed, hopefully once and for all, the DOL’s unauthorized practice of requiring employers to pay liquidated damages in pre-litigation wage and hour matters. For years, during administrative investigations, the DOL would seek to impose, and/or threaten litigation over the imposition of, liquidated damages when it found violations of the Fair Labor Standards Act (“FLSA”). Not anymore.
In a much-anticipated move, President Donald Trump has fired Jennifer Abruzzo, the general counsel of the National Labor Relations Board (“NLRB”). Trump’s action follows a precedent set by former President Joe Biden. On his first day in office four years ago, Biden ousted Peter Robb, the NLRB’s general counsel during the first Trump administration. During her tenure, Abruzzo aggressively sought to expand workers’ rights under the National Labor Relations Act, empower unions, and protect those seeking to organize workers.
The removal of Abruzzo opens the door for President Trump to appoint a new general counsel for the Board. The White House has yet to announce Abruzzo’s replacement, but the president’s transition team for the NLRB was led by Robb and his former deputy, Alice Stock. The new U.S. Labor Board’s prosecutor is expected to adopt a more pro-business stance. It remains to be seen, however, if that agenda will be influenced by Trump’s campaign rhetoric and promises in support of workers and union members. Many have noted that Trump’s choice to lead the Department of Labor, Representative Lori Chavez-DeRemer, is an unusually pro-union Republican whose candidacy was backed by the International Brotherhood of Teamsters in part because she had backed the Protecting the Right to Organize Act as a Congresswoman.
Salary threshold. . .$35,568.00. . .the Eastern District of Texas. . .not the classic answers you expect to hear from your loved ones around the Thanksgiving table when you ask, “Hey guys, what are you most thankful for?” While family, friends, food, and a roof over your head are all great, the fact that the United States District Court for the Eastern District of Texas shot down the Department of Labor’s (“DOL”) attempt at increasing the overtime salary threshold to $58,656.00 is right up there for employers.
The DOL’s Not-So-Final “Final Rule”
Back on April 23, 2024, the DOL announced their “final rule,” which entailed a multi-phase increase of the “white-collar exemption” (the executive, administrative, and professional employees (“EAP”)) salary threshold from $35,568.00 to $43,888.00, starting on July 1, 2024, and then up to $58,656.00, starting on January 1, 2025 (with increases automatically occurring every three years thereafter). Notably absent were any changes to the DOL’s “duties” test, which must be analyzed in conjunction with a salary when determining whether an EAP employee is exempt from overtime. At the time of its announcement, the DOL projected their final rule would make four million workers newly eligible for overtime payments and cost employers nationwide roughly $1.4 billion in the first year alone. Being thankful for a $35,568.00 threshold is looking more and more understandable now, isn’t it?
We’ve all known this day was coming—it was just a matter of time. From the moment the Biden Department of Labor (“DOL”) announced that the Trump DOL’s 2020 increase to the Fair Labor Standards Act salary threshold for the so-called “white collar” exemptions (primarily the executive, administrative, and professional exemptions (“EAP”)) was not good enough, it became crystal clear that a new rule was in the works.
Although it took the DOL some time to put its thoughts together, it issued the proposed new rule in September 2023, and awaited public comments—33,000 of those followed. After reviewing each of the comments, the DOL announced its final rule yesterday. Here are the basics:
It will be effective as of July 1, 2024.
There are no changes to the duties tests (perhaps the only positive news).
The new salary thresholds for the EAP exemptions and the highly compensated employee (“HCE”) exemption essentially will be phased in beginning on July 1, 2024, and then fully implemented on January 1, 2025.
Note: On July 1, 2024, the DOL is implementing an interim increase to the thresholds (as noted below) that is based on current earnings data using the methodology established in the Trump DOL’s final rule.
Then, on January 1, 2025, the DOL will use the new methodology to establish the full salary thresholds.
Beginning on July 1, 2027, and every three years thereafter, the DOL will update the salary thresholds to align with the then-current earnings data.
Here’s a chart based on the DOL’s FAQ that provides the relevant data points:
DATE
STANDARD SALARY LEVEL
HCE ANNUAL COMPENSATION THRESHOLD
Before 7/1/2024
$684/wk ($35,568/yr)
$107,432
7/1/2024
$844/wk ($43,888/yr)
$132,964
1/1/2025
$1,128/wk ($58,656/yr)
$151,164
1/1/2027 (and every three years thereafter)
TBD based on 35th percentile of full-time salaried earnings in lowest Census region
TBD based on 85th percentile of full-time salaried employees nationally
Where’s the good news for employers, you ask? Uh, there really isn’t any … except maybe that the new salary threshold is not immediately rising to $60,000 and the expectation that any one of a number of business organizations is likely to challenge the new rule, perhaps using a number of the theories raised in the fighting that ultimately resulted in the rule being blocked by Judge Mazzant in the federal court in the Eastern District of Texas.
If the above did not wake you up, please keep in mind that the DOL has projected that costs for employers in the first year of this new rule will be about $1.4 billion and the rule will make four million workers newly eligible for overtime pay (unless their employer intervenes in some fashion).
So, what do you do? Grab your popcorn and watch the challenges to the new rule roll in? Maybe—but you should start considering those currently exempt employees who fall in the “danger zone” between $35,568 annually and $43,888 annually and evaluate whether you can consider a raise to the new threshold or instead need to potentially reclassify them to non-exempt status. Fortunately, that danger zone (leading up to July 1, 2024) is somewhat narrow when compared to what will come on January 1, 2025. At least the phased implementation provides a longer window to watch the anticipated legal challenges unfold. As an added note of caution, you should remember that current state law minimum salary thresholds like those that exist in New York and California, which are significantly higher than those in the DOL rule, continue to apply. Don’t touch that dial!
It’s not often that business owners get good news from the government, but small and even some medium-sized businesses with 401(k) plans got a helping hand from the U.S. Department of Labor (“DOL”) earlier this year when the DOL eased the rules for identifying which 401(k) plans are required to have audited financial statements.
Background
The Employee Retirement Income Security Act of 1974 (“ERISA”), everyone’s favorite federal law, has a dual reporting structure for 401(k) plans depending on the number of participants in the plan. Plans with 100 or more participants at the beginning of the year—so-called large plans—are required to prepare audited financial statements and file them with the plan’s Form 5500, Annual Return/Report of Employee Benefit Plan. Plans with fewer than 100 participants escape the audit requirement and, in most instances, can file a Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.
On September 6, 2021, New York Governor Hochul designated COVID-19 a “highly contagious communicable disease.” With this designation, employers now have obligations under the New York Health and Essential Rights Act (“HERO Act”) that go well beyond simply adopting one of the model prevention plans. Since we should all expect the designation to continue, it is only a matter of time before the Department of Labor (“DOL”), collective bargaining representatives, and/or employees pursue claims against employers who fail to comply with the enhanced requirements in the Act. The good news, while compliance is tedious and will take some time, it is easily accomplished. We recently presented a webinar on the HERO Act which we wanted to share with you. The link to the webinar is below and is free if you use the code BRomeLLP. The one-hour webinar is a step-by-step guide to complying with the Act’s provisions.
On August 3, 2020, at the urging of the State of New York, U.S. District Judge Paul Oetken of the Southern District of New York struck down four different provisions of the U.S. Department of Labor’s (“DOL”) implementing regulation for the Families First Coronavirus Response Act (“FFCRA”): (1) the “work availability” requirement, under which paid leave is only available if an employee has work from which to take leave; (2) the requirement of employer permission to take leave intermittently; (3) the definition of “health care provider” for purposes of exclusion from paid leave benefits; and (4) the requirement for an employee to provide certain documentation before taking leave. New York v. U.S. Dep’t of Labor, 2020 WL 4462260 (S.D.N.Y. Aug. 3, 2020).
Although the judge did not issue a “nationwide” injunction, the mere fact that there was a decision by a federal judge striking certain important provisions of the FFCRA regulation left employers (or maybe just their counsel) in a panic about the implications outside of New York. Would this decision impact eligible employees in California? Would the decision be retroactive? Would the DOL appeal? Would it seek a stay of the decision while the appeal was pending? Continue reading “Strident DOL Revises FFCRA Reg, Thumbs Its Nose at NY Federal Court Decision”
Yesterday evening, the U.S. Department of Labor (“DOL”) published its first round of guidance on the Families First Coronavirus Response Act (“FFCRA”), which takes effecton April 1, 2020.[1]
The guidance—provided in a Fact Sheet for Employees, a Fact Sheet for Employers, and Questions and Answers—answered some of the high-level questions employers have been asking. This update summarizes several of those important answers. However, more guidance is needed and expected in the coming days.
What is the FFCRA?
COVID-19 legislation that contains two key paid leave acts—the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.
In a nutshell, the Emergency Paid Sick Leave Act entitles employees to paid sick leave when they cannot work or telework due certain COVID-19-related circumstances affecting the employee or someone for whom the employee is caring.[2] The Emergency Family and Medical Leave Expansion Act provides paid leave for employees caring for a child due to school or childcare provider closures related to COVID-19. For an overview of both Acts, check out Blank Rome’s Update.
Yesterday, the U.S. Department of Labor (“DOL”) completed the wage and hour trifecta, issuing the third of its critically acclaimed proposed rules—this one redefines (or clarifies, if you prefer) the regulations addressing the concept of “joint employment.” Joint employment under the Fair Labor Standards Act (“FLSA”) is an important concept as it often is used to hold multiple entities liable for the minimum wage and overtime violations relating to a group of employees. The existing regulations have not been materially updated in more than 60 years—needless to say, the nature and scope of business interactions have changed materially over that time. Continue reading “Trifecta! DOL Issues Proposed “Employer-Friendly” Joint Employer Rule”
Yesterday, as anticipated (see our prior blog post here), the U.S. Department of Labor (“DOL”) released its proposed guidance to clarify the rules regarding what is and is not required to be included in the “regular rate of pay” (“RROP”). Remember, the RROP is the rate used for the calculation of overtime pay to non-exempt workers.
Though completely unexpected when the DOL initially announced its plan to clarify these rules, employers will undoubtedly be pleased by the effort. Nothing—from the employer standpoint—is really ever perfect, but this is progress. Originally targeted to be released in December 2018, like many other DOL projects, it was delayed a bit.
According to the DOL’s announcement, this proposal attempts to clarify that employers can exclude the following from the RROP:
the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
payments for unused paid leave, including paid sick leave;
reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements;
discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary;
benefit plans, including accident, unemployment, and legal services; and
tuition programs, such as reimbursement programs or repayment of educational debt.
Though we’re still working our way through the proposal, we are hopeful that it actually does address certain items that have long created quagmires for employers. Of course, the proposal will be subject to 60 days of public comment. Then, once the DOL reviews all comments, it will issue a final rule. Please stay tuned for further updates as this process continues!
