The Department of Labor has issued a Notice of Proposed Rulemaking increasing the salary threshold for the Executive, Administrative, and Professional overtime exemptions.  The proposal increases the salary threshold from $684/week ($35,568/year) to $1,059/week ($55,068/year) and automatically updates the threshold every 3 years.

No action is needed now, as the proposed rule must first go through the public commentary period, then editing, finalizing, and establishing an effective date.

Similar to the 2020 Final Rule that last increased the threshold from $455/week, this proposal doesn’t change the duties tests for these “white collar” exemptions.  As a reminder, to be exempt from overtime, three requirements must be met:  the employee must be paid on a salary basis, the salary must meet the required threshold amount, and the job must meet the duties test for the particular exemption.  Simply being paid a salary does not automatically make an employee exempt from overtime.

Employers may consider reviewing their exempt employees’ salaries now to prepare for action that may be needed for those that would fall below a new threshold.

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The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.