Hunton Employment & Labor Perspectives

One of the most controversial regulatory actions from the US Department of Labor during the Obama administration was the DOL’s regulation significantly increasing the salary level under the Fair Labor Standards Act’s white-collar exemptions.  The regulation sought to more than double the current salary requirement of $23,660 per year, and it included an automatic updating requirement that would have accelerated future salary level increases at a rate well above the rate of inflation.

That regulation was ultimately enjoined on November 22, 2016 a few days before its December 1, 2016 effective date.  Since that time, the ultimate fate of the regulation has been less than clear, leaving many employers uncertain as to whether the regulation would ever go into effect, be withdrawn, or replaced.  The changing of presidential administrations in January 2017 only served to exacerbate and prolong that uncertainty.

In testimony on June 7, 2017 before the House Subcommittee for Labor, Health and Human Services, Education, and Related Agencies of the Appropriations Committee, newly-appointed Secretary of Labor Alexander Acosta provided a preview of what’s likely to come on the salary level issue under his regime.  In that testimony, Secretary Acosta indicated that the Department would be filing a Request for Information (RFI) “in the next two to three weeks” that would solicit feedback from the public on the salary increase issue.  Though RFI’s serve many different purposes, they are typically used by agencies to gather information prior to preparing and issuing a proposed regulation through the formal notice and comment rulemaking process.  The forthcoming RFI will likely include pointed questions related to specific features of the salary requirement and may even contain a list of potential options for addressing the situation.

To be clear, Secretary Acosta believes that the salary level needs to be increased.  In his words, “any rule that has a dollar amount that isn’t updated for as long as this [the current salary basis] has been is a problem because life gets a lot more expensive.”  However, he was critical of the manner in which the prior administration implemented the increase, stating that more than doubling the salary requirement in a single increase “created a shock to the system.”

It is rare for employers to get a “redo” when it comes to DOL regulations, particularly this quickly.  And given most employers’ experience last fall in preparing to comply with the December 1, 2016 salary increase, employers will be better positioned this time around to provide meaningful input and data.  Employers who will be significantly impacted by an increase to the salary requirement may wish to take the opportunity to make sure their viewpoints and experiences are heard.