This week, HR Policy Association joined 100+ employer organizations in a letter to Secretary of Labor Marty Walsh urging the Labor Department (DOL) to hold stakeholder meetings prior to the development of a proposed rule on “white collar” exemptions to the overtime regulations under the Fair Labor Standards Act (FLSA).
DOL likely to move to a higher salary threshold for exempt employees: During the final year of the Obama administration, an attempt to raise the minimum salary for a white collar exemption from $23,660 to $47,476 and automatically increase the salary limit every three years was thwarted by a federal court. In 2019, the Trump administration raised the threshold to its current rate of $35,568 per year or $684 per week. While the current DOL has not publicly stated the salary threshold increase it is considering for the notice of proposed rulemaking, members of Congress and advocates have recommended the Biden administration increase the threshold to at least $82,732 by 2026. If DOL raises the threshold to this recommended amount, it will cause a significant number of reclassifications of salaried employees to non-exempt status.
Our letter explains: “This will be a significant rulemaking with respect to cost, difficulty in implementation and impact on the workforce, particularly given the current acute labor shortages. Our organizations urge DOL to follow past precedents and hold meetings with the regulated community to obtain input on the potential impact of any changes to the overtime exemption requirements.”
Outlook: As the Association previously reported, DOL is expected to issue a proposed rule this spring regarding the FLSA's overtime and minimum wage exemptions. DOL would benefit from stakeholder input on the current economic situation and the potential impact new overtime regulations could have on the workforce and economy. Given the vast increases in remote work and concerns around historic increases in inflation, it is particularly important for DOL to gather input before issuing a proposed regulation. A new salary threshold, regardless of the level of increase, could force employers to reclassify large numbers of non-exempt employees, whose working hours employers would have to track.