Labor & Employment Alert – Federal Department of Labor announced proposed regulation intended to apply to Puerto Rico and increase the standard salary level of most exempt employees.

On August 30, 2023, the Department of Labor (DOL) announced proposed regulation issued under the Fair Labor Standards Act (FLSA) to increasing the standard salary level of most exempt employees.    The proposed rule also specifically intends to restore overtime protections for U.S. territories”.  Thus, if a final rule is announced as proposed, it will increase the standard salary level for most of the exempt employees in Puerto Rico from $455 (current) to $1059 per week, about $55,000 per year.

The comment period for this proposal starts today, September 8, 2023, and will continue until November 7, 2023.

As a result of this proposed regulations, employers must be aware and consider the following:

  1. Increased Standard Salary Level: If enacted as proposed, the regulation will increase the standard salary level of exempt employees in Puerto Rico from $455 per week (current) to $1059.00 per week ($55, 068 annually for a full-year worker) for the executive, administrative or professional employees.  It will also increase the annual compensation threshold for the highly compensated employee to $143,988.
  2. Automatic Updated Mechanism: The DOL is also proposing an automatic mechanism that would mandate for future increases of all the earnings thresholds.
  3. Applicability: The proposed rule specifically intends to restore the overtime protections for US territories. FLSA applies to most employers with at least $500,000 business or gross sales in a year.
  4. Comments: Interested individuals are invited to submit written comments on this notice of proposed rulemaking. Electronic submissions at http://regulations.gov are recommended by the DOL.  The comment period for this proposal starts today, September 8, 2023, and will continue until November 7, 2023. 
  5. Considerations: The proposed rule is not a final rule, so no immediate action is required.  Nevertheless, employers should evaluate the potential impact of the proposed regulation in their workforce and alternatives for reclassification of employees.

Our firm is available to answer any question regarding this proposed regulation.  Please contact us at labor@estrellallc.com.