To update the rules interpreting the Fair Labor Standards Act’s (FLSA) exemptions from the minimum wage and overtime pay requirements for executive, administrative, and professional employees, the U.S. Department of Labor’s Wage and Hour Division published a Notice of Proposed Rulemaking (NPRM) on August 30, 2023.
The minimum salary for these categories of exempt employees in the 50 states and the District of Columbia would rise from $684 to $1,059 per week (or $55,068 annually) under the proposed revisions. The proposed changes would also raise the highly compensated employee’s total annual compensation threshold from $107,432 to $143,988. The DOL also suggests automatically revising these income requirements every three years. The minimum pay levels in the final rule might be far higher because the DOL will update the 2022 data used as the basis of the proposal.
In Puerto Rico, the salary test minimum threshold was last revised in 2004 to $455 per week under the FLSA and in 2006 under local Regulation No. 13 of the P.R. DOL. Highly compensated employees must receive at least $100,000 annually under Regulation No. 13. Still, the higher minimum threshold requirements of 29 CFR Part 541 should take precedence for FLSA covered employees.
In 2019, the DOL decided to exclude the increase and maintain the $455 weekly threshold for workers in Puerto Rico, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
The agency proposes that this new increase be implemented in Puerto Rico, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands, since they are subject in full to the federal minimum wage, leaving only American Samoa at 84% of the standard salary level, since its subject to a special minimum wage rate below the federal minimum. The DOL proposes that 90 days after the highest industry minimum wage for American Samoa equals the federal minimum wage, the full standard salary level would apply in all industries in American Samoa.
The DOL encourages employers and other interested parties to submit written comments regarding the proposed rule.
Employers in Puerto Rico ought to think about the effects of such a significant rise from $455 to $1,059 a week, and they ought to think about offering written comments to the DOL during the public comment period, which starts 60 days after the date of publication in the Federal Register.
Please let us know if you would like the help of any of the Nolla, Palou & Casellas, LLC’s employment law attorneys in putting together comments for the DOL during the public comment period, as well as to think about and plan how to manage pay practices in light of the significant increases in the requirements on the minimum weekly salary and the total annual compensation for highly compensated exempt employees.
Sources:
2023, NPRM on proposed revision of 29 CFR Part 541: eap-exemption-nprm.pdf (dol.gov) ,
2021, “Ley de Salario Mínimo de Puerto Rico” (pr.gov)
2006, Regulation No. 13 of the Puerto Rico Department of Labor and Human Resources of 2005, Reglamento Núm. 13 del Departamento del Trabajo y Recursos Humanos de Puerto Rico of 2005, Registered at and published by the Puerto Rico Department of State in 2006: (Microsoft Word – Reglamento N\372m. 13 5ta. Rev. _2005_.doc) (pr.gov)
2006, Final Revision to Regulation No. 13 of the Puerto Rico Department of Labor becomes effective today. https://www.npclawyers.com/final-revision-to-regulation-no-13-of-the-puerto-rico-department-of-labor-becomes-effective-today/
2004, Revisions to 29 CFR Part 541 from the Federal Register: 04-9016.pdf (govinfo.gov) , eCFR :: 29 CFR Part 541 — Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Computer and Outside Sales Employees
