On August 30, 2023, the U.S. Department of Labor (DOL) released a proposal to raise the minimum weekly salary.
The U.S. Department of Labor proposes a salary threshold increase of nearly $20,000. The proposed rule raises the weekly salary to $1,059 per week, totaling $55,068 annually.
The purpose of the DOL’s proposed rule would be to ensure that workers receive extra pay for long hours.
The current law requires employers to pay a weekly salary of $684 or $35,568 per year. The proposed rule raises the weekly salary to $1,059 per week, which totals an annual salary of $55,068.
The DOL wishes to implement a system where earnings increase every three years. The Notice of Proposed Rulemaking (NPRM) would qualify for one of the Fair Labor Standards Act’s (FLSA) three white-collar exemptions.
If the proposed rule becomes final, it is expected to go into effect in July 2024. The rule was published in the Federal Register on September 8, 2023. The 60-day comment period ends on November 7, 2023, with an expected announcement weeks later.
An estimated 3.4 million salaried employees may be entitled to overtime pay. If employers are to simply raise salaries to this proposed threshold, will they be able to keep their businesses afloat?
Consider the restaurant and hospitality industry. Many managers who are currently in salary positions work as many as 60 to 80 hours per week. If owners and employers were paying overtime for these salaried positions, they would undoubtedly be over budget. Will the proposed rule force businesses in your area to make difficult business decisions? We predict that employers could convert salary employees to hourly employees. They will pay them a lower hourly rate to account for the overtime they will be forced to pay many of their currently salaried employees who work well over 40-hour weeks. In doing this, the employees will not gain the benefits of the proposed rule, and minimum wage discussions will be sure to come into effect.
In 2016, the DOL attempted to raise the salary threshold for white-collar exemptions. Prior to this, they had not tried to do so since 2004. The 2016 effort essentially doubled the salary threshold, and it was blocked in court.
In 2020, the DOL increased the threshold amount to its current level, $684 per week. The DOL encourages both employers and employees to submit written comments with thoughts regarding the proposed rule.
Again, this is a proposed rule and is subject to modification. Be expectant of judicial challenges and a final ruling in 2024. To find this proposal, as well as other DOL rules and regulations, visit Regulations.gov to make your voice heard in federal decision-making.
For more information on the above article or any human resource management services, please contact Amber Malik at (334) 321-4729 or by leaving us a message below.
Written by Katelyn Kirby. Copyright 2023 Machen McChesney, LLP. All rights reserved. machen.cpa