by Aigner Carr and Robert Nickel
On August 30, 2023, the United States Department of Labor (DOL) announced a proposed rule that would increase the minimum salary requirements for individuals employed in a “bona fide executive, administrative, or professional capacity (commonly referred to as the “white-collar” or “EAP exemption”). The DOL received approximately 33,309 comments during the notice and comment period, which closed on November 7, 2023. We are now waiting for the DOL to publish the final version of the rule.
The EAP exemption regulations require three conditions to be met for an employee to qualify as exempt:
- the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in quality or quantity of work performed (the salary basis test);
- the salary amount must meet a minimum specified amount (the salary level test); and
- the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the duties test).
The employer bears the burden of establishing the applicability of the exemption.
Under the proposed new rule, the minimum salary for EAP exempt employees will increase to $1,059 per week ($55,068 per year). This proposed amount is a 55% increase from the current $684 per week ($35,568 per year) and represents the 35th percentile of weekly earnings for full-time salaries employees in the lowest wage Census Region (the South).
For Highly Compensated Employees (HCEs), the proposed rule increases the minimum salary to $143,988 per year—a 34% increase from the current salary of $107,432 per year. Per the DOL, this represents the 85th percentile of full-time salaried employees at the national level. Employees who qualify for the EAP exemptions, as well as HCEs, must either be paid the new minimum salary or be reclassified as hourly (and be paid overtime). The DOL estimates that about 3.6 million more employees will be eligible for overtime pay under the new rule if their salaries are not increased to meet the new salary minimum.
The proposed rule notes that the salary level will be automatically updated every three years based on earnings data.
Notedly, the proposed rule does not change existing rules for teachers, who are not subject to a salary level. The proposed rule also does not alter the duties test for EAP employees and the DOL states that this will remain the key factor for about three-quarters of the salaried white-collar workforce in determining whether an employee has exempt status. Finally, the proposed rule does not impact benefits that an employee may be entitled to.
Sign up to receive Insight notifications via email here.
Labor and Employment – Tueth, Keeney, Cooper, Mohan & Jackstadt, P.C. has successfully represented a number of businesses, large and small, throughout the Midwest in labor and employment matters. Our broad range of experience includes employment discrimination litigation, wage-hour investigations, affirmative action revision plans development, INS audits, and a variety of traditional labor matters.
Aigner S. Carr practices primarily in the areas of labor & employment, litigation, and education law, representing both private and public institutions in education and employment matters. Aigner attended Saint Louis University School of Law and is licensed to practice in Missouri. During law school, Aigner competed on the Thurgood Marshall Mock Trial Team and was awarded Best Trial Advocate of the Mid-West region for 2015-2016 competition. Aigner is also a former member of the Theodore McMillian American Inns of Court. Before joining the firm, Aigner interned for the Saint Louis Circuit Attorney’s Office and the Federal Public Defender’s Office of the Eastern District of Missouri.
Robert A. Nickel practices primarily in the areas of Missouri education law, higher education law, labor and employment law, and commercial litigation. He represents both public and private institutions in education, labor, and employment matters. Robert advises K-12 schools and school districts, colleges and universities, and other public entities as well as private employers throughout Missouri on employment and litigation matters.