by: Amanda Good

The Department of Labor has announced a proposed rule that it anticipates would make more than one million more American workers eligible for overtime pay.

Certain salaried employees are exempt from the Fair Labor Standards Act’s minimum wage and overtime pay requirements if they are employed in executive, administrative, or professional capacities, as those terms are defined in 29 CFR part 541 and other applicable law.  To qualify for an exemption, employees must generally (1) be salaried; (2) be paid more than a specified weekly salary level; and (3) primarily perform executive, administrative, or professional duties, as defined in the Department’s regulations, although certain employees are not subject to all of these requirements and there are other potential exemptions.

In May 2016, the Department of Labor (“DOL”) issued a rule raising the minimum salary threshold for an employee to be classified as exempt. The rule was declared invalid by the United States District Court for the Eastern District of Texas and the DOL later requested that its own appeal of that decision be dismissed.

Now, the DOL is proposing a new rule that raises the salary threshold from $455 per week ($23,660 per year) to $679 per week ($35,308 per year). The new rule would also raise the annual compensation for highly compensated employees (“HCEs”) to $147,414. Employers with exempt employees paid less than $35,308 annually, or HCEs compensated less than $147,414, should closely monitor the status of this proposed rule, which could take effect in early 2020.