US DOL to Increase Minimum Salary Requirements for Overtime Exempt Workers

The U.S. Department of Labor (“DOL”) announced that it will be proposing a new regulation to raise the minimum salary threshold for overtime exempt employees under the Fair Labor Standards Act (“FLSA”). The proposed regulation would raise the minimum salary requirement to $55,068 per year for employees who are exempt from the FLSA’s minimum wage and overtime requirements for executive, administrative, and professional employees. Employees who do not receive at least that amount would need to be re-classified to non-exempt status (and entitled to overtime).

The proposed rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, which the DOL plans to publish in the Federal Register, would raise the threshold under the Fair Labor Standards Act to $1,059 per week, or $55,068 per year. The current FLSA rate is $684 a week, which amounts to a salary of $35,568 per year.

The proposed new standard salary threshold would be pegged to the 35th percentile of weekly earnings of full-time salaried workers in the Southern U.S., which is currently the lowest-wage U.S. Census region.  Meanwhile, the salary threshold for highly compensated employees under the proposal would be $143,988, tied to the 85th percentile of salaried workers nationally. (That would be an increase from the current minimum salary threshold of $107,432 for highly compensated workers). In addition to raising the salary threshold, the proposed rule would automatically update that ceiling every 3 years, based on then-current earnings data.

For New York employers, the proposed federal threshold is less than the current New York salary threshold for executive and administrative employees of $1,125.00 per week (in NYC, Long Island and Westchester) and $1,064.25 per week (for the rest of New York State). Thus, for employees who are exempted under the executive and administrative overtime exempt categories, the federal minimum salary requirements would be inapplicable.  However, there is no New York State minimum salary threshold for employees exempt under the professional exemption.  Thus, for such employees (e.g., nurses, therapists), the minimum salary would need to comport with the federal standard in order for the employees in that category to continue to be exempt from overtime.

Notably, our readers will recall that New York State’s own minimum salary thresholds for overtime exempt workers are calculated as being 75 times the State’s minimum wage rates.  Thus, as New York’s minimum wage rate goes up, again, in January 2024 (and again for the next 2 years), the minimum salary threshold will also increase.  Thus, again, the federal salary threshold changes will be largely irrelevant for New York employers with exempt employees who work in New York and who are exempt from minimum wage and overtime pay under the administrative and executive exemptions.  And it is unlikely that the federal minimums will surpass New York’s own requirements for minimum salaries for overtime exempt employees.   But, with respect to exempt workers under the professional exemption, New York employers should pay attention.

The DOL has previously stated that it would publish the proposed rule in August but, as of the date of this publication, August 31, the regulation has not yet been published in the Federal Register.