March 8, 2019 Department of Labor Announces Proposed Updates to Federal Overtime Exemptions

Yesterday the U.S. Department of Labor announced proposed changes to the regulations governing the so-called “white collar” exemptions for executive, administrative, and professional employees under the federal wage and hour law, the Fair Labor Standards Act (FLSA).  The proposed changes include increasing the salary threshold for these federal exemptions from the current level of $455 per week ($23,660 per year) to $679 per week ($35,308 per year).

California employers should keep in mind that the proposed changes will have little or no impact in California, because the salary threshold for these exemptions under California state law is already higher than the proposed new federal threshold.  The California salary threshold is currently $960 per week ($49,920 per year) and is set to increase in January of each year through 2022.  To be exempt from overtime under both the FLSA and California law, an employee must satisfy both the federal and state exemption requirements in full.

The Department of Labor is also asking for public comment on its plan to periodically review and update the federal salary threshold.  Comments may be submitted up to 60 days after the Notice of Proposed Rulemaking issued yesterday is published in the Federal Register.  It is unclear when the final rule might be expected to take effect.

The Obama Administration’s effort to increase the salary threshold in 2016 was struck down by a federal court.  That proposal would have increased the federal salary threshold to $913 per week ($47,476 per year), and establish automatic updates to the salary threshold every three years.

This E-Update was authored by Aaron Buckley.  For more information, please contact Mr. Buckley or any other Paul, Plevin attorney by calling (619) 237-5200.