Federal DOL Declares Proposed Rule to Improve Exempt Worker Minimal Salaries

The federal Division of Labor (DOL) has lastly introduced the discharge of its proposed rule to extend minimal salaries required for sure workers to be labeled as exempt from minimal wage and time beyond regulation. Whereas we don’t often report on proposed guidelines as a result of they tend to alter—and sometimes the efficient date is distant and unknown—we needed to offer some data given the potential significance of this rule.

At present, govt, administrative, and skilled workers should be paid no less than $684 per week ($35,568 per yr) to be correctly labeled as exempt. This grouping of exemptions is commonly referred to collectively as “EAP.” The proposed rule, if adopted as-is, would enhance the wage threshold to require that EAP workers be paid no less than $1,059 per week ($55,068 per yr) to be labeled as exempt.

At present, workers who’re exempt beneath the extremely compensated worker (HCE) exemption, which has its personal particular standards, should be paid no less than $107,432 per yr. The proposed rule, if adopted as-is, would enhance this quantity to require that HCE workers be paid no less than $143,988 per yr to be labeled as exempt.

Lastly, the proposed rule, if adopted in its present kind, would implement computerized updates to the EAP wage stage and HCE complete annual compensation requirement each three years.

To study extra in regards to the guidelines for these exemptions, together with what duties workers should carry out to qualify, see the Federal FLSA White Collar Exemption Information on the platform.

Timing

The proposed rule will seemingly be printed quickly after which there might be a 60-day remark interval. Throughout that point, the DOL will settle for feedback (learn: ideas, complaints, arguments) from anybody who want to submit them.

As soon as the remark interval is closed, the DOL will assessment the suggestions and probably make adjustments earlier than publishing the ultimate rule. We don’t understand how lengthy that assessment and revision course of will take, although it’ll seemingly be no less than a number of months. The DOL has advised that these adjustments might take impact as quickly as 60 days after the publication of the ultimate rule.

It’s price noting that final time the DOL tried a drastic change to the wage minimums, the rule was thrown out in litigation simply weeks earlier than taking impact. We’ve got no method of predicting if that can occur once more, however it is seemingly that the rule change might be litigated.

Impacts

Whereas it could be a bit early to start out excited about the impacts of this rule change, employers that need to maximize planning time ought to contemplate the next:

• You might have to reclassify many workers as nonexempt—this can deliver the anticipated administrative trouble.
• In case you have exempt workers who make properly under the proposed minimal wage (and subsequently received’t be getting a elevate to deliver them as much as the brand new threshold), they usually’re usually working greater than 40 hours per week, you’ll have to finances for his or her time beyond regulation pay.
• If you happen to can’t afford to pay time beyond regulation, you’ll have to redistribute work, discover different efficiencies, or probably alter features of your small business.
• Staff who go from exempt to nonexempt will have to be educated within the methods of nonexempt workers (e.g., they’ll have to log their time, take lunches and breaks, and observe your time beyond regulation insurance policies).

As typical, if a state regulation requires increased minimal salaries than what’s or might be required by the federal rule, the state minimums should be adopted.

We’ll present further data when the ultimate rule is printed and can create a lot of assets to assist employers make the required adjustments as easily as potential. If you happen to’d prefer to assessment the proposed rule, yow will discover it right here.

Authentic content material by the Mineral Platform. This data is supplied with the understanding that Payroll Companions isn’t rendering authorized, human assets, or different skilled recommendation or service. Skilled recommendation on particular points needs to be sought from a lawyer, HR guide or different skilled.