The Department of Labor (DOL) is updating regulations under the Fair Labor Standards Act (FLSA) regarding minimum salary levels for Executive, Administrative, and Professional (EAP) employees. Proposed changes would significantly change the minimum annual salary threshold from $35,568 to $55,068. They also propose raising the highly compensated employee (HCE) total annual compensation threshold to the annualized weekly earnings of the 85th percentile of full-time salaried workers nationally ($143,988); it is currently $107,432.
The hope is that employers will reclassify lower paid EAP employees to non-exempt, changing them to hourly workers and providing them with access to overtime pay for hours worked over 40 in a work week. If this does happen, it will likely cause employee payroll costs to rise.
What should you do?
- Read Notice of Proposed Rulemaking (NPRM), Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees
- Provide comments to the DOL by November 7th
- Look at your exempt employees making less than $55,068 and determine what steps you should take:
- If you decide you would reclassify your employees, wait until the changes are finalized (the last time, there was an 11th hour stay on enacting proposed salary changes)
- If you do make changes to employee FLSA classification and/or pay, do so in writing
- Consider the impacts of these potential changes to your 2024 budgets
If approved, these changes will go into effect 60 days after publication of a final rule, likely early 2024.
By Samantha Brinkley, MA, SHRM-SCP
