Proposed Rule Making

In the Notice of Proposed Rulemaking, DOL is proposing three main changes in order to ensure everyone is being compensated fairly. First and foremost, their aim is to update section 13(a)(1) exemption's salary level requirement which is unchanged since 2004. As mentioned above, the current salary level for exemption is $455 per week, or $23,660 annually. The Department wants to set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers which is about $970 a week or $50,440 a year. They are deciding “whether to allow nondiscretionary bonuses to satisfy some portion of the standard test salary requirement” . Secondly, the Department has proposed to update the total annual compensation required for the Highly Compensated Employee (HCE) exemption which has not change since …show more content…
The Department wants to increase the “HCE annual compensation requirement to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers” or $122,148 per year. Lastly, DOL is considering automatically changing both the standard salary test and the annual compensation requirement for highly compensated employees based on changes in the economy. Their hope is to prevent the levels from becoming outdated. The Department does not want to wait another ten years or so to make any kind of changes to the salary level and HCE annual compensation requirement since prior to 2004 the last revision was made in 1975. DOL is considering two alternatives for methodologies for annually updating the salary and compensation thresholds. The Department’s first option is updating the thresholds based on a fixed percentile of earnings for full-time salaried workers. Their second option is to update the thresholds based on changes in the Consumer Price Index for all urban consumers