Over the last year, the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) has stepped up enforcement proceedings in traditional high-priority areas, including tipped employee wages, employee meal break and rest periods, and misclassification of workers as independent contractors. Now, the DOL WHD is poised to raise the compensation threshold level for white-collar exemptions to the Fair Labor Standards Act (FLSA) overtime requirements, with a planned target date for release of a Notice of Proposed Rulemaking by October 2022.
Coupled with rising interest rates, high inflation, and the growing prospects of a looming recession, this new proposed regulation has the potential to add even greater financial strain on employers already struggling to attract and retain new talent for their workforces in a historically tight labor market, in which demand for workers far outpaces unemployed people looking for work.
The FLSA requires most employers to pay their non-exempt employees overtime premium pay at least 1.5x their regular rate of pay for any hours worked over 40 hours in a week. Section 13(a)(1) of the FLSA, commonly known as the white-collar exemption, exempts bona fide executive, administrative, professional, outside sales and certain computer employees from the FLSA's minimum wage and overtime requirements.
The regulations implementing the exemption generally have required three things: (1) the employee must be paid a predetermined and fixed amount that...
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