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U.S. DOL Proposes Increase for Salary Test under the FLSA

On August 30, 2023, the U.S. Department of Labor issued a notice for a proposed rule change under the Fair Labor Standards Act (FLSA). If the rule goes into effect, the DOL would increase the minimum salary amount that an employee must be paid in order to qualify as exempt from overtime pay for the Salary Test under the FLSA.

As I’ve mentioned before, in order for a company to avoid paying an employee overtime pay (1.5 times the regular hourly rate), the employee must be paid enough in salary to meet the Salary Test under the FLSA (currently at least $684 per week) and must perform certain duties to meet the Duties Test (executive duties, administrative duties, or professional duties, most commonly).

Under the proposed rule, the Department of Labor would be increasing the minimum salary of $684 per week up to the new amount of $1,059 per week. If enacted, the DOL estimates that approximately 3.4 million employees would be newly entitled to overtime pay (unless the company increased the employee’s pay to meet the new threshold).

At this point, the public is allowed to comment on the proposed rule change, but once the DOL moves forward with increasing the salary amount, we can expect to see significant litigation from companies and their lobbyists opposing the increase. And ultimately a court will have to decide whether the increase is appropriate and allowed under the DOL’s rulemaking authority. Stay tuned!

If you have any other questions about whether or not you’re entitled to overtime pay under the FLSA, please feel free to reach out to me directly at jsummerlin@hortonlawfirm.net for a more detailed exploration of your situation.

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DOL Plans to Raise Salary Threshold on FLSA Exemptions

As I’ve written about previously, an employee is entitled to overtime pay unless the employee is meeting all of the Fair Labor Standard Act’s (FLSA) requirements. First, does the employee meet the salary threshold under the FLSA by making at least $455 a week in salary (called the “salary test”)? Second, is the employee performing the necessary duties to meet the “duties test,” such as supervising two or more employees or exercising significant discretion in an office setting? The salary threshold test sets the floor on the minimum amount of money that an employee must be paid before the FLSA permits an employer to claim an exemption and therefore NOT have to pay that employee overtime.

What is the current Salary Threshold under the FLSA?

Currently, the DOL has set that amount at $455 a week (about $24,000 a year). That’s a fairly low figure and hasn’t been raised in a number of years (and it’s not tied to inflation at all currently). But the U.S. Department of Labor recently announced that it plans to raise the salary threshold up to $35,000 a year. (Back in 2016, the Obama Administration tried to raise the threshold to about $47,000 a year, but that proposed rule change was put on hold by a federal judge.) The DOL will unveil the proposed rule at some point in the near future.

When will the DOL implement the new Salary Threshold?

The salary change won’t go into effect immediately. The DOL must first permit the public to comment on the proposed change and provide feedback. Management-side lawyers and lawyers representing the interest of employees will both have much to say on the new regulation. And there’s always the chance that businesses sue the DOL again to prevent implementation of the new rule.

Are you, as a South Carolina employee, meeting the current salary threshold?

For South Carolina employees, the question still remains: Have you been properly classified under the FLSA? If you are not getting overtime pay even if you are working more than 40 hours a week, then the questions to ask are whether you are meeting the current salary threshold of $455 a week and whether you are performing the actual duties of a salaried exempt employee (executive duties, administrative duties, or professional duties, primarily). If you don’t know, contact an experienced FLSA overtime attorney for a consultation today. And keep an eye on this blog for updates on the new DOL regulation as they develop.