United States: Here We Go Again: DOL Proposes White-Collar Salary Threshold Of $35,308

Seyfarth Synopsis:  In the latest chapter in the ongoing saga of the U.S. Department of Labor’s efforts to increase the salary threshold required for most white-collar exemptions, on March 7, 2019, the Department announced a new proposed level of $679 per week ($35,308 per year).  No changes to the duties tests are proposed. 

The proposal will be published in the Federal Register shortly, at which time the public will be given 60 days to comment on the proposal.  Those comments will be considered by the Department in formulating the final rule.  As you may recall, the Department’s proposal in 2015 was expected to result in a salary threshold of $50,440; after the comments were reviewed, the threshold was $47,476.  Recognizing the influence comments have on the final outcome, as we have in each of the previous chapters of this saga, Seyfarth intends to submit comments in response to the proposal.

In addition to the general salary threshold, the Department proposes to increase the total annual compensation requirement for the highly compensated employee exemption from $100,000 to $147,414.  The Department also proposes to keep a provision from the 2016 rulemaking related to bonuses:  nondiscretionary bonuses and incentive payments (including commissions) may be used to satisfy up to 10% of the $35,308, and any shortfall must be made up on an annual basis.

Finally, the Department has eliminated the language from the 2016 rulemaking related to automatic updates of the salary threshold.  Instead of an automatic increase, the Department noted that it was “affirming its intention to propose increasing the earnings thresholds every four years.”  The Department notes, however, that notice-and-comment rulemaking will be required for such an increase to take place. 

Below is a comparison of the current standards, the 2016 enjoined final rule, and the 2019 proposal:

Ultimately, after a full rulemaking process in 2015-16, litigation enjoining the final regulation, a change in Presidential Administration, a request for information resulting in over 200,000 comments, and six in-person listening sessions conducted around the country, we are in many ways exactly where we were are the start of the process--a proposed rule upon which to comment, and an uncertain timeline for a final rule to become effective.  Indeed, employer and employee groups alike have threatened litigation over the new rulemaking.

This all begs the question: What should employers do now?  Because the final rule could contain a different set of salary levels than the proposal contains, it is premature to begin planning in earnest to make changes based on what the final rule will ultimately be.  For now, employers should consider carefully, however, the anticipated effects of the rule were it to become effective as it has been proposed.  If that consideration gives rise to concerns or observations that should influence the Department’s final rulemaking, you can let us know.  We will integrate it into the public comments that we submit within the next 60 days.

We will be sure to update you as the process continues. 

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