In December 2023, the U.S. Department of Labor (DOL) published its Fall 2023 Regulatory Agenda, which provides insight into what will be keeping DOL’s leadership and regulation writers busy early in 2024. Among the actions of interest to human resources professionals is an indication that the DOL plans to issue a final rule defining and delimiting the exemptions for Executive, Administrative, Professional, Outside Sales, and Computer employees in April 2024.

The announcement is located here.

As a refresher, the DOL issued its proposed rule on September 8, 2023. As proposed, the rule would significantly increase the salary thresholds for the FLSA’s white collar exemptions. The proposed rules seek to increase the weekly salary threshold from $684 ($35,568 annually) to $1,059 ($55,068 annually)- an increase of nearly 55%. Further, the proposed rule also seeks to significantly increase the annual salary threshold for the Highly Compensated Employee exemption from $107,432 to $143,988- an increase of over 34%! While those percentage increases are shocking, the actual increases could be even more, as the proposed rule also said that the actual salary threshold will be based on earnings data as of the date the final rule takes effect.

Whether the DOL will meet its April 2024 target date remains to be seen. The agency received more than 30,000 comments in response to its notice of proposed rulemaking, and must address substantive comments in its final rulemaking. The DOL’s proposed rule states that the rule would become effective 60 days after publication of a final rule (which is the minimum timeframe mandated for major rules changes under the Congressional Review Act). And, of course, legal challenges are possible (including injunctive relief barring enforcement pending the challenge, like what happened to the Obama-era rule revision).

Some states are also hopping on bandwagon to increase exempt salary thresholds, but with significantly higher salary thresholds than those applicable to the FLSA’s exemptions. Among other states, New York recently passed a bill calling for three consecutive annual increases to the salary thresholds for its white-collar exemptions under state law. Other states, like Alaska and California, have long had salary thresholds higher than those applicable under the FLSA.

Employers should continue to watch for updated announcements from the DOL on the status of the final rule. In the meantime, employers should start reviewing the workforce and identifying employees who may be affected if the salary thresholds outlined in proposed rule take effect.

Questions?

Contact the author Sandy Andre.