The proposed rules to change the salary threshold to the Fair Labor Standards Act (FLSA) exemption tests were posted to the Federal Register on September 8, 2023.
The proposed regulations can be found on the Federal Register website. The U.S. Department of Labor (DOL) is seeking public comments until November 7, 2023. Workers, employers, and other interested stakeholders are encouraged to provide comments on the proposed changes. You can find instructions on how to comment in the DOL document Making Your Voice Heard in the Federal Rulemaking Process and on regulations.gov.
Changes
Proposed changes to the rules include:
- Increase the salary threshold to $1,059 per week ($55,068 annually for a year-round employee)
- Automatic updates to earnings thresholds every three years
- Provide a less restrictive duties test for certain highly compensated employees who receive total annual compensation of $107,432 or more and are paid at least $684 per week
The substantial increase to the weekly salary threshold is similar to action taken in 2016 when rules were proposed to change the threshold from $455 to $915 per week. Legal challenges followed and implementation of the rule was blocked just before the effective date. New overtime rules were implemented in 2020, raising the threshold to the current $684 per week.
Similar legal challenges are expected to take place when the final rules are published. Despite the prediction that challenges may be successful, employers should prepare for changes when the rules are finalized. Districts don’t need to do anything now, but it’s advisable to be aware of who may be impacted.
Impact to districts
While it is unclear what the final rules will be, the proposed regulations increase the minimum weekly pay rate from $684 per week to $1,059 per week for an employee to be considered exempt. Of course, in addition to the salary test, employees would also need to meet the same duties tests to be considered exempt. More details about exemption tests can be found in FLSA Exemption Test Criteria, available the HR Library (member login required).
The proposed rules will not have any impact on the exemption status for classroom teachers or academic administrators (e.g., curriculum specialists, instructional coaches, counselors, assistant principals, principals). There is currently no minimum salary requirement for these employees and there are no changes proposed that would affect their exemption status.
Some administrators and professionals who are currently exempt may no longer meet the minimum salary test. Non-teaching professionals such as nurses, librarians, and athletic trainers who are paid at or near the state minimum salary schedule may fall below the salary requirement. In addition, there is no proration of the weekly salary threshold for part-time professional staff so these positions also may become nonexempt.
|
2023-2024 State Minimum Salary Schedule
|
|
Year of Experience
|
Monthly Rate
|
Annual Salary (10-month contract)
|
Days
|
Weeks per year
|
Weekly Rate
|
|
0
|
$3,366
|
$33,660
|
187
|
39
|
$863.08
|
|
1
|
$3,439
|
$34,390
|
187
|
39
|
$881.79
|
|
2
|
$3,510
|
$35,100
|
187
|
39
|
$900.00
|
|
3
|
$3,583
|
$35,830
|
187
|
39
|
$918.72
|
|
4
|
$3,735
|
$37,350
|
187
|
39
|
$957.69
|
|
5
|
$3,888
|
$38,880
|
187
|
39
|
$996.92
|
|
6
|
$4,041
|
$40,410
|
187
|
39
|
$1,036.15
|
|
7
|
$4,183
|
$41,830
|
187
|
39
|
$1,072.56
|
|
8
|
$4,317
|
$43,170
|
187
|
39
|
$1,106.92
|
|
9
|
$4,444
|
$44,440
|
187
|
39
|
$1,139.49
|
|
10
|
$4,563
|
$45,630
|
187
|
39
|
$1,170.00
|
|
11
|
$4,677
|
$46,770
|
187
|
39
|
$1,199.23
|
|
12
|
$4,785
|
$47,850
|
187
|
39
|
$1,226.92
|
|
13
|
$4,885
|
$48,850
|
187
|
39
|
$1,252.56
|
|
14
|
$4,981
|
$49,810
|
187
|
39
|
$1,277.18
|
|
15
|
$5,071
|
$50,710
|
187
|
39
|
$1,300.26
|
|
16
|
$5,157
|
$51,570
|
187
|
39
|
$1,322.31
|
|
17
|
$5,237
|
$52,370
|
187
|
39
|
$1,342.82
|
|
18
|
$5,314
|
$53,140
|
187
|
39
|
$1,362.56
|
|
19
|
$5,386
|
$53,860
|
187
|
39
|
$1,381.03
|
|
20 & Over
|
$5,454
|
$54,540
|
187
|
39
|
$1,398.46
|
Administrative and professional employees paid less than $1,059 per week, even if they are part time, will change to nonexempt status and need to be treated as any other nonexempt employee. This includes keeping weekly time records and paying a premium for any overtime worked. The alternative is to increase their pay to at least $1,059 per week. This might be practical for full-time employees but not for part-time employees.
How to prepare for the new rules
Review all exempt non-teaching employees’ pay, paying particular attention to jobs in the lower exempt pay grades, non-teaching professionals paid on the teacher salary schedule, and all part-time exempt employees. Calculate each person’s weekly earnings based on the number of weeks they actually work by dividing their annual salary by the number of workweeks. Count part of a week worked as a full week.
This will help identify potential issues and allow the district to consider the budget implications.
HR Services will continue to provide members with updates on the rules as information is released by the Department of Labor. For more information on the topic, check out FLSA Exemption Salary Threshold Revision Released in the HRX.
April Mabry is an assistant director at TASB HR Services. Send April an email at april.mabry @tasb.org.
Stay up to date with all the latest HR news and trends by joining the HRX mailing list!
Tagged: "Exemption status", "Fair Labor Standards Act", FLSA, Overtime