We all likely remember the changes that were to apply to the income limits for identifying salary-exempt employees and the impact these were going to have on wages paid to some salaried employees. These changes were finalized by the Obama administration back in 2016 and would have raised the minimum salary for exemption from $23,600 to almost $48,000 per year. However, there were questions as to the appropriateness of the final changes and whether or not the administration had the authority to make these changes, especially to the level implemented by the executive branch. A federal court in Texas invalidated this rule nationwide.
Employers potentially hard-hit by this rule then watched the 2016 elections in earnest wondering how the outcome would affect the future of these changes. Would the new administration appeal the Texas court ruling or take the changes off the table altogether? After the election of Donald Trump, many employers believed this issue may go away and, indeed, the new administration did back off on appealing the court ruling. Still, many employers bit the bullet and upped the salary of their exempt employees in preparation for the rule change, which hasn’t yet materialized.
Since the election of President Trump, Secretary of Labor, Alexander Acosta, has indicated that the administration does support an increase in the salary limits. These limits have been only updated twice in the last 43 years and not at all since 2004. Industry professionals have been reading the “tea leaves” and expect that the administration will address this topic eventually.
Now, the time has come. In a DOL announcement, it was stated that “The Department intends to issue a Notice of Proposed Rulemaking (NPRM) to determine the appropriate salary level for exemption of executive, administrative and professional employees.” This new proposed rule is anticipated in March of 2019, after which, there will be a standard public comment period before the final rule is announced, likely later next year to be effective sometime in 2020.
Integrity Data, your partner in HR & payroll compliance will be keeping a watchful eye on these, and other developments. Stay tuned to our blog for more information as the Department of Labor moves forward on this topic.