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Changing FLSA Thresholds -- What it Means to Employee Pay (8/30/2023)

Updated: Oct 2, 2023

If you are a Federal Contractor providing services, you'll want to keep an eye on this!

The U.S. Department of Labor (DOL) announced on Aug 30, 2023 its forthcoming proposed rule "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees". This proposed rule would update and revise the regulations under section 13(a)(1) of the Fair Labor Standards Act (FLSA) implementing an increased standard salary level and highly compensated employee total annual compensation threshold as well as provide for an automatic update mechanism to allow for timely updating of all thresholds to reflect current earning data.

Specifically, the proposed rule would:

  • Increase the FLSA regulations’ standard salary level from $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year).

  • Increase the total annual compensation requirement for highly compensated employees from $107,432 per year to $143,988 per year.

  • Restore overtime protections for U.S. territories, ensuring workers in those territories where the FLSA minimum wage applies have the same overtime protections as other U.S. workers.

  • Automatically update earnings thresholds every three years so they keep pace with changes in worker salaries, ensuring that employers could adapt more easily because they would know when salary updates would happen and how they would be calculated.

The proposed rule would result in restoring and extending overtime protections (i.e., time and a half) to many low-paid salaried workers for hours worked over 40 in a week.

UPDATED 9/08/2023: The full text of the proposed rule is available at the Federal Register for review here. Comments are due by November 7, 2023.

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