Proposal to Increase Salary Threshold for Exempt Employees

During the last week of August 2023, the U.S. Department of Labor ("DOL") announced a proposed rule to increase the salary threshold for overtime pay exemption. Under the proposed rule, the annual salary threshold for executive, administrative and professional positions would increase from $35,568 ($684 per week) to $55,068 ($1,059 per week). If adopted, employees currently classified as exempt would need to meet the new salary threshold to continue to maintain their exempt status, in addition to satisfying the duties test for their particular exemption. This proposal comes four years after the last increase, which went into effect in January 2020, and proposes automatic increases to the threshold every three years.

The DOL estimates that 3.6 million salaried workers would become eligible for overtime protection. The proposal also raises the salary threshold for the highly compensated employee exemption from $107,432 to $143,988.

The proposed rulemaking follows a handful of states that have already increased their salary thresholds (e.g., Alaska, California, Colorado, Maine, New York, Washington). Employers in states that would be impacted should continue to monitor developments from the DOL, as the proposed rulemaking will be open for public comment for 60 days following publication in the Federal Register. Your human resources department should review current pay data to determine which employees may be impacted and consider an action plan for compliance in the event the rule is published.