December 09, 2021

Will Spring Bring Salary Spike?

On December 9th, the U.S. Department of Labor (DOL) published its Fall regulatory agenda. One agenda item could change how you classify your employees as exempt under the Fair Labor Standards Act (FLSA). A Notice of Public Rule Making (NPRM) is scheduled for April 2022. The DOL announced, “One of the primary goals of this rulemaking would be to update the salary level requirement of the section.”

Many of you remember the last go-round, yes?  It was kind of like the recent on-again-off-again COVID-19 vaccine mandates.  Quick Recap: In order for any employee to be properly classified as exempt under the FLSA, the person must meet three thresholds or tests: a minimum salary, salary basis, and duties test.  The minimum salary threshold was just increased effective January 1, 2020, from $455 to $684/week.

When the minimum salary threshold is increased, that mean any employee who is paid less than that amount cannot be properly classified as exempt, with a few exceptions. If the employee cannot be properly classified as exempt, that means the employee must be paid overtime for every hour worked over 40 in a work week.

That’s just part of the rules under the FLSA.  The odds are you cannot stop there, as of this writing there are at least 20 states that have their own white-collar or EAP regulations.  If you are employing any exempt employees in any of those states, be sure you are doing so in consideration of the state regulations as well!

Want a list of the 20 states? Click here and also ask your legal counsel for guidance, including on your local jurisdictions!