On August 30, 2023, the U.S. Department of Labor (“DOL”) issued its long-anticipated proposed rule to increase the salary threshold for exemptions under the Fair Labor Standards Act (“FLSA”)—a proposal that is estimated to make more than three million workers eligible for overtime pay when they work more than 40 hours per week. The proposal includes the following significant changes:
The FLSA requires employers to pay covered employees time and one-half their regular hourly wage rate for all hours worked in excess of 40 in any workweek. The Act exempts from overtime requirements “any employee employed in a bona fide executive, administrative, or professional capacity,” 29 U.S.C. § 213(a)(1), commonly referred to as the white-collar exemptions. The DOL is charged with interpreting this exemption and, since the 1940s, has included a “salary-level” test, in addition to a duties test, as part of its regulations prescribing which employees fall within the white-collar exemptions.
The DOL’s recent Proposal is the latest in a long series of efforts to increase the salary thresholds. During the Obama administration, the DOL attempted to increase the salary thresholds via the rulemaking process, issuing a Final Rule in May 2016. (See our May 31, 2016 memorandum for more discussion of the 2016 rule.) On November 22, 2016, Judge Amos Mazzant of the Eastern District of Texas temporarily enjoined the regulations on a nationwide basis. Nevada v. U.S. Dep’t of Labor, 218 F. Supp. 3d 520 (E.D. Tex. 2016). Judge Mazzant held that “the Department exceed[ed] its delegated authority and ignore[d] Congress’s intent by raising the minimum salary level such that it supplants the duties test.” Id. at 530. (See our November 29, 2016 memorandum for more discussion of Judge Mazzant’s decision.) By Order dated August 31, 2017, Judge Mazzant permanently enjoined the regulations. Nevada v. U.S. Dep’t of Labor, 275 F. Supp. 3d 795 (E.D. Tex. 2017). (See our September 5, 2017 memorandum for more discussion of Judge Mazzant’s decision.) The DOL appealed the original temporary injunction ruling to the Fifth Circuit but, after the change in Presidential administrations, the DOL informed the Fifth Circuit that it intended to implement revised overtime regulations through notice-and-comment rulemaking, the end result of which are currently in place.
The DOL’s Proposed Rulemaking will be open to public comment for 60 days once it is published in the Federal Register. Given the anticipated volume of comments on this rule, the DOL may extend the 60-day comment period. The DOL is then required to review the comments prior to the issuance of any final rule.
If, after taking the comments into account, the DOL ultimately elects to enact a final rule in a form that is substantially similar to the Proposed Rulemaking, the enactment is unlikely to occur until sometime in 2024. It is anticipated that any such rule will also be challenged in court immediately upon enactment—similar to what occurred in connection with the rule that was proposed during the Obama administration.
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