By: Noah Finkel and Scott Hecker
Seyfarth Synopsis: On June 21, 2022, the Biden Administration announced the release of its Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions. In connection with the Administration’s new regulatory agenda, the U.S. Department of Labor’s Wage and Hour Division targeted October 2022 for the release of a Notice of Proposed Rulemaking on its regulations governing the white-collar exemptions.
As our readers are well aware, the DOL has made clear that, during the Biden Administration, it will attempt to increase the minimum salary that employers must pay to most of their exempt employees. DOL has conducted several listening sessions with various groups, including employer representatives, over the past few months to gather information and opinions on whether, when, and to what amount the DOL should increase the minimum salary which employers must pay to exempt employees to maintain their status as exempt from the FLSA’s overtime requirements under the executive, administrative, professional, and computer employee exemptions.
Employers should be aware that the regulatory agenda, indicates the DOL is targeting October 2022 for release of a Notice of Proposed Rulemaking (“NPRM”) on “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees.” While this is not necessarily a firm date — indeed the Fall 2021 regulatory agenda listed April 2022 as a goal to issue the NPRM — this means the DOL could publish this fall its proposal for what should be done with the rule on the minimum salary for exempt status — currently $684 per week, which annualizes to $35,568.
The amount of the new minimum salary, which may constitute a significant increase, remains to be seen. Whatever it is, it will substantially impact all employers. The NPRM will propose a new minimum salary and will provide 60-90 days for the public to comment on the proposal (though the DOL could propose changes to other aspects of its exempt status regulations, that does not appear likely). After that, the DOL will take several months to review the comments and then create a final rule, which likely would be effective a few months after it is promulgated. There may be a legal challenge to the new minimum salary, though that might depend on the new amount. Though this is somewhat speculative and could be delayed for several reasons, a new minimum exempt status salary level — whatever it is — could be in effect in the back half of 2023 or very early in 2024.
Be on the lookout this October for the DOL’s proposal.