The U.S. Department of Labor (DOL) released a proposed rule on August 30^th which would, if enacted, substantially increase the number of workers eligible for overtime pay. The DOL proposed raising the annual salary threshold for administrative, executive, and professional exemptions pursuant to the Fair Labor Standards Act (FLSA) from $35,568 to $55,068. In other words, under the proposed rule, employees would have to earn at least $1,059 per week in order to be exempt from overtime. The proposed rule also seeks to increase the salary requirements for “highly compensated employees” (also exempt from overtime laws) from $107,432 to $143,988. The DOL estimates that these changes, if implemented, would affect approximately 3.6 million workers. The DOL also proposed automatic adjustments to the overtime threshold every three years.

Employers should understand that this is not a law yet. The next step in the process is a notice and comment period. The proposed rule may be adjusted based on the comments. Nonetheless, employers should begin reviewing their compensation structures and pay practices should the proposed rule be implemented. The current weekly threshold for exempt employees is $684 a week. The proposed hike to $1,059 per week is a significant increase that will require employers to plan in order to be compliant.

As the last quarter of the year approaches, employers should timely meet with employment counsel to review the list of employees currently exempt from overtime and prepare for enactment of the DOL’s proposed rule.

This article is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic, reach out to Mary-Ellen H. Allen at Lamb McErlane PC: 610-701-4420 or mallen@lambmcerlane.com

At Lamb McErlane Mary-Ellen is co-chair of the Employment Law department and a member of the Litigation department. She concentrates her practice in employment law and commercial litigation.