An Increase in the Salary Level - Still a Likely Possibility

On June 27, 2017, the U.S. Department of Labor ("DOL") sent a Request for Information ("RFI") related to the overtime rule to the Office of Management and Budget for its review. When published, the RFI will provide the public an opportunity to comment. As a result of this RFI, there is still a very good chance that the current salary level for an exempt employee ($23,660 per year) will increase in the near future.

Recall that the DOL published a Notice of Proposed Rulemaking in July 2015, and invited interested parties to submit comments. The DOL received and reviewed over 270,000 comments before issuing a Final Rule that was to become effective on December 1, 2016. As we discussed in several client webinars, the Final Rule increased the salary level for the executive, administrative and professional employee exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year), increased the salary level for the highly compensated employee exemption from $100,000 per year to $134,004 per year, and established a mechanism that would automatically increase these salary levels every three years, beginning on January 1, 2020.

In order to prepare for the December 1, 2016 compliance date, many clients spent a significant amount of time reviewing all employee salary levels and job duties. Then, on November 22, 2016, a Texas court enjoined the implementation of the Final Rule. As this litigation proceeded, the DOL asked for several extensions to file briefs in the case in order to better understand the new Secretary of Labor's (Alexander Acosta) position on the salary-level increase requirement. On June 7, 2017, Secretary Acosta testified before an appropriations committee that he agrees that the salary level should be increased, but he disagreed with how the Obama administration implemented the change. In short, the salary level will increase in the near future.

Once the RFI is published, because it will likely cover other wage-related topics, we encourage all clients to review the RFI, and consider commenting on those areas that impact their business and their ability to attract and retain employees while competing in the global economy. Along the way, the Firm will continue to provide guidance for planning purposes. Please continue to look for additional articles and webinars on this topic as information becomes available.