On August 30, 2023, the U.S. Department of Labor (DOL) announced its Notice of Proposed Rulemaking (NPRM) concerning updates to the Fair Labor Standards Act’s (FLSA) overtime regulations, specifically the executive, administrative, professional, and highly-compensated employees (HCE) exemptions. In a move that could impact an estimated 3.4 million workers, the DOL’s current proposal seeks, most notably, to increase the weekly salary level threshold from $684 ($35,568 per year) to $1,089 ($55,068 per year).
FLSA Overview
The FLSA requires that most employees be paid at least the federal minimum wage for all hours worked and receive time and a half the employee’s “regular rate of pay” – that is, all remuneration, including, without limitation, incentive compensation, non-discretionary bonuses, and commissions an employee receives in a given workweek, subject to eight statutory exclusions – for all hours worked over 40 in a given workweek. Despite this general rule, the statute provides certain exemptions, commonly known as the “white collar” exemptions, for those employed as bona fide executive, administrative, or professional employees. Unlike non-exempt employees, exempt employees, including those that satisfy the white collar exemptions, are not entitled to overtime compensation for hours worked over 40.
To qualify for one of the white-collar exemptions, employees must satisfy certain criteria. Specifically, employees must (i) be paid on a salary basis, which means that...
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