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Client Alert: US Department of Labor Proposes Increased Salary Requirement for White Collar Overtime Exemptions

Date: September 5, 2023
On August 30, 2023, the US Department of Labor, Wage and Hour Division, issued a notice of proposed rulemaking increasing the requirements for claiming overtime exemptions for Executive, Administrative and Professional employees, commonly referred to as the “White Collar Overtime Exemptions.” Currently, a White Collar employee can only be overtime-exempt (that is, paid on a flat salary basis without overtime) if the employee performs certain functions requiring judgment and discretion, and is paid at least $684 per week, approximately $35,600 annualized.

The proposed regulation, if accepted as a revision to existing DOL Regulation 29 CFR Part 541, defining overtime eligibility, would increase the weekly required qualification threshold to $1,059 per week, or approximately $55,000 annualized. Somewhat recently, in 2019, the $684 per week requirement was raised from the prior requirement of $455 per week, thus representing an increase in the salary requirement by 130% in four years, if the proposed regulation is accepted. 

The proposed regulation would also increase the less rigorous “streamlined” White Collar qualification test for highly paid employees from $100,000 to $143,988, and lock in the streamlined test to be prospectively adjusted each year to equal a wage indexed at the 85th percentile of wages by all full time workers, as determined by the DOL.

The proposed rule comment period extends 60 days, through the end of October. If approved after the close of the comment period, the new rule might go into effect as early as before the end of 2023. The comment period might result in a lesser increase in the final rule, however it is likely the current DOL will strongly argue for the full requested adjustment.

The change would be most critical for employers which are now claiming an overtime exemption for employees earning more than $35,000 annually, but less than $55,000 annually. Upon enactment, these to-date White Collar employees, occupying this $20,000 band would lose their current status as overtime-exempt. 

Whiteford law is available to advise strategies to assure ongoing compliance with this new regulation, upon its likely enactment, as well as any other requirements of the Federal Wage Hour or State laws.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.