Coming Soon? U.S. Department of Labor Proposes New Rule for Exempt Employees

Employment Law

October 31, 2023

Authors: Alex Clark and Noah Hill

The U.S. Department of Labor (Department) is proposing to increase the minimum annual salary for exempt employees from $35,568 ($684 per week) to $55,068. The Department also proposes making minimum salary thresholds subject to automatic adjustments through a regulatory mechanism. The Department explains that the “[l]ong intervals between rulemakings have resulted in eroded earnings thresholds based on outdated earnings data that were ill-equipped to help identify bona fide” exempt employees.1 In response, the Department proposes an automatic updating mechanism that would produce “timely, predictable, and efficient” updates to earnings thresholds.2 The Department estimates that this change will affect 3.4 million salaried employees.3

As a part of its rule-making process, the Department is accepting formal comments from the public until midnight on November 7, 2023. You can submit a formal comment online at: The Department must publish all formal comments as-is, and then consider the commentary before promulgating its final rules.

What is an exempt employee?

An exempt employee is one who is not required to be paid overtime when they work more than 40 hours per week.4

What employees can employers treat as exempt?

Under federal regulations, an employee who satisfies the following conditions can be treated as an exempt employee:

1. The employee must be paid a predetermined and fixed salary;
2. The amount of the salary must be $684 per week, which is equivalent to $35,568 per year (the proposed rule would increase this to $55,068 per year); and
3. The employee’s job duties must primarily involve executive, administrative, or professional duties.5

The employee’s actual job duties must relate to management or operations6 and allow for the exercise of discretion and independent judgment on significant matters.7 Manual labor or other “blue collar” workers are not exempt.8 Job titles and job descriptions do not determine exempt-employee status, nor does merely paying an employee a salary.9

What is the penalty for not paying overtime?

An incorrect classification of an exempt employee could result in substantial costs. Montana law provides that the employer must pay the employee their full wages, plus up to a 110% penalty for the unpaid wages.10 Employers that fail to comply with the FLSA also can be subject to federal civil and criminal penalties.11

What are my options?

The first thing that you can do is submit a formal, public comment to the Department on its proposed rule change. While this rule change is not inevitable, and the Department must consider public comments before promulgating a valid rule, it seems quite likely that the minimum salary for exempt employees will increase significantly and that future updates to the minimum threshold will be automatic. The second thing you can do is begin considering how this rule change will affect your business operations. Please contact one of our experienced employment law attorneys at Worden Thane, P.C. if you need advice related to these changes, your other employment issues, and more.

1 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, Proposed Rule, 09/08/2023, Page 62177, accessed at
2 Id., at 62154,
3 Id., at 62195,
4 29 U.S.C. § 213.
5 84 FR 51230, pg. 51230, Executive Summary, September 27, 2019.
6 29 C.F.R. § 541.201(a).
7 § 541.202.
8 § 541.3.
9 § 541.2.
10 Mont. Code Ann. § 39-3-206.
11 29 U.S.C. § 216.

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