The U.S. Department of Labor (DOL) has issued a proposed rule to increase the minimum salary requirements for the “white collar” exemptions (executive, administrative, and professional) from minimum wage and overtime pay requirements under the Fair Labor
Standards Act (FLSA).

Under the proposed rule, the salary level for the white-collar exemptions to apply will increase from the current $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year). That would be a 55% increase from the current level that became effective in January 2020 during the Trump Administration. The annual compensation level for highly compensated employees will also increase by 34%, from the current $107,432 per year to $143,988 per year.

However, the DOL has indicated the actual salary threshold will be based on earnings data as of the date the final rule takes effect — which means that the salary floor may be even higher than the projected $55,068. That could lift the operative threshold to more than $60,000 annually.

The new rule will require employers to reclassify many workers or pay them more. With the California DOL on a campaign to audit businesses that potentially misclassify employees and the penalties that they are assessing, not to mention the proliferation of employees willing to litigate these matters, contact your business attorney to discuss the most effective way to comply once the compensation levels rise for the “white collar” exemptions.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.