You’re getting a raise! DOL again looks to hike FLSA salary threshold

In September 2019, the U.S. Department of Labor (DOL) expanded the Fair Labor Standards Act’s (FLSA) overtime coverage to more than one million workers. In response, employers everywhere readied themselves for a potentially seismic shift. Calls to legal counsel, workforce audits, and wage adjustments ensued to make sure workers were properly classified. Soon, it may be time to do it all again.

Agency’s targets

In December, the DOL announced it had plans to revisit the salary threshold for “white-collar” exempt employees under the FLSA. Currently, the salary threshold for the professional exemptions is $684 per week, which equates to $35,578 per year.

The DOL also signaled its intent to revisit the salary threshold for the highly compensated employee exemption, currently set at $107,432. Although the department hasn’t made any adjustments to the current salary thresholds, employers should be ready to respond.

Misclassification penalties

Anytime the DOL makes changes to the FLSA’s standards, it’s a good idea for employers to pay close attention. The distinction between exempt employees (not entitled to overtime pay) and nonexempt employees (eligible for the extra compensation) is often oversimplified or misunderstood.

All too often, words like “salary” and “hourly” have become the primary descriptors for employees who receive overtime pay and those who do not. And all too often, making the determinations on that basis alone leads to financially disastrous consequences for the employer.