Reed Smith Client Alerts

Since a 2016 Texas federal court decision enjoined the Department of Labor (DOL) from implementing a final rule intended to raise the salary threshold for certain exempt employees from $455 per week to $913 per week, employers have been waiting to see what the DOL would do next. On Thursday, the DOL issued a Notice of Proposed Rulemaking (NPRM) that – though not as drastic – again seeks to raise the threshold.

Under the Fair Labor Standards Act (FLSA), exemption from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees requires, in part, a minimum salary of $455 per week. That has been the rule since 2004. In May 2016, the DOL issued a final rule, increasing the threshold for these “white collar” employees to $913 per week. The final rule would have become law in December 2016 if a court had not intervened.

Six months after the DOL published the 2016 final rule, a federal judge in Texas shot it down, holding that the DOL overstepped its authority, particularly with regard to a provision of the final rule that implemented an “automatic mechanism” for increasing the threshold every three years, starting on January 1, 2020. An appeal has been held in abeyance while the DOL reassessed its position, including taking public comments through a Request for Information (RFI) process. The DOL finally issued a new NPRM on March 7, 2019.