“If I could sum up why I’m committed to the HR Girlfriends community it would come down to because we are ‘….in this together.'”

~Sana’ Rasul, Chief Girlfriend

HR Law Alert: Federal DOL Announces Proposed Rule to Increase Exempt Employee Minimum Salaries

The federal Department of Labor (DOL) has finally announced the release of its proposed rule to increase the minimum salary required for certain employees to be classified as exempt from minimum wage and overtime. While we don’t usually report on proposed rules because they have a tendency to change – and often the effective date is distant and unknown – we wanted to provide some information given the potential significance of this rule.

Currently, executive, administrative, and professional employees must be paid at least $684 per week ($35,568 per year) to be properly classified as exempt. This grouping of exemptions is often referred to collectively as “EAP.” The proposed rule, if adopted as-is, would increase the salary threshold to require that EAP employees be paid at least $1,059 per week ($55,068 per year) to be classified as exempt.

Currently, employees who are exempt under the highly compensated employee (HCE) exemption, which has its own specific criteria, must be paid at least $107,432 per year. The proposed rule, if adopted as-is, would increase this amount to require that HCE employees be paid at least $143,988 per year to be classified as exempt.

Finally, the proposed rule, if adopted in its current form, would implement automatic updates to the EAP salary level and HCE total annual compensation requirement every three years.

To learn more about the rules for these exemptions, including what duties employees must perform to qualify, see the Federal FLSA White Collar Exemption Guide on the platform.

Timing
The proposed rule will likely be published soon and then there will be a 60-day comment period. During that time, the DOL will accept comments (read: suggestions, complaints, arguments) from anyone who would like to submit them.

Once the comment period is closed, the DOL will review the feedback and potentially make changes before publishing the final rule. We don’t know how long that review and revision process will take, though it will likely be at least a few months. The DOL has suggested that these changes could take effect as soon as 60 days after the publication of the final rule.

It’s worth noting that last time the DOL attempted a drastic change to the salary minimums, the rule was thrown out in litigation just weeks before taking effect. We have no way of predicting if that will happen again, but it is likely that the rule change will be litigated.

Impacts
While it may be a bit early to start thinking about the impacts of this rule change, employers that want to maximize planning time should consider the following:

– You may need to reclassify many employees as nonexempt—this will bring the expected administrative hassle.
– If you have exempt employees who make well below the proposed minimum salary (and therefore won’t be getting a raise to bring them up to the new threshold), and they’re regularly working more than 40 hours per week, you’ll need to budget for their overtime pay.
– If you can’t afford to pay overtime, you’ll need to redistribute work, find other efficiencies, or potentially alter aspects of your business.
– Employees who go from exempt to nonexempt will need to be trained in the ways of nonexempt employees (e.g., they’ll need to log their time, take lunches and breaks, and observe your overtime policies).

As usual, if a state law requires higher minimum salaries than what is or will be required by the federal rule, the state minimums must be followed.

We’ll provide additional information when the final rule is published and will create a number of resources to help employers make the necessary changes as smoothly as possible. If you’d like to review the proposed rule, you can find it here.

Leave a comment

Never miss an opportunity to earn HRCI/SHRM credits, identify a mentor, or connect 1:1 with another HR Girlfriend in your city or across the country.

0 Comments
Inline Feedbacks
View all comments
Author picture

HR Girlfriends™ is a Human Resources networking organization dedicated to advancing the practice and culture of people empowerment. Our team of Girlfriends consult, train, educate, develop, share, promote, and advocate for solutions in the field of human resource management.

Are You IN?
Or Are You OUT?

It’s time you join forces with a community of like-minded peers ready to tackle the issues unique to the women of HR.
  • All
  • Affirmation
  • Career Mondays
  • Certification
  • COVID-19
  • CyberSAFE
  • Guest Blogger
  • HR Advisor
  • HR Law Alert
  • HR Q&A
  • HR Reading
  • HR Reel Talk
  • Join Our Team - Apply Now
  • Membership
  • Talent Management
All
  • All
  • Affirmation
  • Career Mondays
  • Certification
  • COVID-19
  • CyberSAFE
  • Guest Blogger
  • HR Advisor
  • HR Law Alert
  • HR Q&A
  • HR Reading
  • HR Reel Talk
  • Join Our Team - Apply Now
  • Membership
  • Talent Management
HR Q&A

Q&A: What is Discrimination Based on National Origin?

Yes. Discrimination based on national origin is prohibited under Title VII of the Civil Rights Act and includes treating applicants or employees unfavorably because they ...
Read More →
Affirmation

Affirmation: I outline the big picture on my canvas before I paint in the small intricate details

Just as a painter envisions his masterpiece, I envision living my dreams. I know where I am going and how I plan to get there. ...
Read More →
HR Q&A

Q&A: A remote employee’s roommate has been disrupting their work to the point that their performance is suffering. How should we handle this?

This situation should be handled the same way you’d manage most work disruptions affecting an employee’s performance. Start by having a conversation with the employee ...
Read More →
Share via
Copy link
Powered by Social Snap