2018 is likely to see activity from the Department of Labor to increase the minimum salary amounts for overtime exempt employees. As you may recall, one of the most significant developments out of the Department of Labor in the recent past was the effort to increase this minimum salary under the Fair Labor Standards Act. The Department of Labor originally announced a final rule that would have increased the minimum salary amount from $23,660 to $47,476 per year. If an employee did not meet this salary amount, then the employee would have to be treated as an hourly employee and be eligible for overtime. The rule created great consternation for employers of all sizes who had employees affected by the change. In fact, the rule would have affected millions of employees nationally. So, what ever happened to that rule and where does it stand now?
Just as employers were scrambling to figure out how to address the rule, a Texas federal court issued a nationwide preliminary injunction in November 2016 that prevented the implementation of the rule. That same court later invalidated the rule in August 2017, but the case is currently pending appeal. In the meantime, a new Labor Secretary was appointed by President Trump, and the Department of Labor thereafter requested comments, data, and information on the appropriate salary level for overtime exempt positions. As a result, the appeal is being held in abeyance pending further action by the Department of Labor.
The request for information from the Department of Labor is the first step in the rulemaking process. Therefore, a new rule will likely be issued at some point in 2018. Because the old salary standard of $23,360 was put in place many years ago, an increase is expected to occur, but not to the extent of the prior rule. Employers need to be mindful that those overtime exempt employees who are close to the current salary standard may soon be at risk to become overtime eligible. Given the frenzy that the prior rule change caused, employers would be wise to be looking at this issue now in anticipation of a change and planning how they will deal with the issue.