Hunton Employment & Labor Perspectives

On August 31, 2017, a federal district court judge in Texas struck down the Department of Labor’s Obama-era controversial 2016 rule that raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” exemption. Under the proposed regulations, the minimum salary threshold was raised to just over $47,000 per year, and increased the overtime eligibility threshold for highly compensated workers from $100,000 to about $134,000.

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The U.S. Department of Labor continues to work towards dismantling the Obama administration’s overtime rule, saying that it intends to revise the controversial rule to lower the salary threshold under the Fair Labor Standards Act’s white-collar exemptions. The Obama administration’s rule sought to more than double the current salary requirement of $23,660 a year for white-collar exemptions. Though the rule was estimated to make 4 million additional workers eligible for overtime pay, it was also expected to cause employers significant financial and regulatory burdens.

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.

Today, the U.S. Department of Labor published its final rule increasing the salary requirement for the Fair Labor Standards Act’s white-collar exemptions to $47,476 per year ($913 per week). Though the new salary level is not as high as the $50,440 per year level predicted by the DOL in its July 2015 proposed rule, the final rule nonetheless more than doubles the current salary requirement of $23,660 per year ($455 per week). The reason the salary requirement is somewhat lower than initially predicted is that the final rule applies the proposed 40% threshold to the average full-time salary compensation paid in the lowest-wage Census region, as opposed to applying the 40% threshold to the national salary average.