Earlier today (March 7, 2019), the U.S. Department of Labor announced new proposed regulations (.pdf) that would increase the minimum salary for employees to qualify for the Executive, Administrative, and Professional exemptions under the Fair Labor Standards Act to $679 per week, equivalent to $35,308 per year. This is an increase from the current minimum of $455 per week ($23,660 per year), set in 2004. However, it is significantly less than the $913 per week ($47,476 per year) minimum established in final regulations issued in 2016 and later blocked by a federal court.
Unlike the ill-fated 2016 regulations, the new proposed rules do not provide for automatic increases of the minimum salary. Instead, the Department proposes to review the minimum salary threshold every 4 years.
One new wrinkle included in the proposed rules is a provision that would allow employers to use non-discretionary bonuses and commissions paid annually or more frequently to satisfy up to 10% of the minimum salary obligation.
The Department will accept public comments on the new rules for a period of 60 days after the Notice of Proposed Rulemaking is formally published in the Federal Register. The timing of a final rules remains uncertain, but it is likely that the Department will aim to have final rules in place before the 2020 election.
For now, no need to panic even if you have exempt employees whose salaries fall below the proposed new minimum. It will be months before we know exactly what the final rules will look like, let alone whether they will survive the inevitable legal challenges.
Stay tuned for updates and further analysis.