The U.S. Department of Labor (DOL) is poised to increase the minimum the salary necessary to classify workers [including many high-ranking fire officers] as overtime exempt under the FLSA. The new rule, which will likely go into effect in early 2024 will raise the minimum required weekly salary for overtime exempt white-collar employees by $375 per week and the minimum annual salary for highly compensated employees by $36,556 per year. The DOL estimates 1.3 million workers will become overtime eligible because of these increases.
In order to fully understand the potential fire service implications from the DOL’s impending salary increase for overtime exempt employees, we need to start with a little background information. Under the FLSA, there is a presumption that all employees are entitled to overtime pay after working 40 hours in a seven-day workweek. However, the FLSA exempts several categories of employees from this general rule. Included in these exemptions is a total overtime pay exemption for white-collar executive, administrative, and professional employees. Additionally, DOL regulations exempt certain highly compensated employees from the FLSA’s overtime protections. Many senior fire officers are classified as overtime exempt white collar employees.
There are two basic requirements necessary to classify any employee as a white-collar overtime exempt employee. The first relates to the employee’s job duties. This is often called the “duties test.” In a nutshell, the employee must perform duties consistent with the exemption. Each exemption carries a different list of job duties.
The second requirement relates to the exempt employee’s salary. This is referred to as the “salary test.” There are two components to the salary test. First, an exempt employee must receive a fixed salary. In other words, the employee cannot be paid on an hourly basis. The second component of the salary test is the minimum weekly salary. This is where the DOL is proposing a change.
Currently, overtime exempt employees must be paid at least $684 per week ($35,568 annually). The DOL is planning on increasing this minimum weekly salary to $1,059 per week ($55,068 per year). Additionally, the DOL is also proposing an increase to the minimum annual salary necessary to classify an employee as a highly compensated overtime exempt employee. Currently, an employee must earn at least 107,432 per year in order to meet this narrow exemption. The DOL is planning on increasing this to $143,988 per year under the current proposal.
Fire Service Implications
At first glance, the weekly minimum salary increase will likely not impact many exempt full time fire officers, since they [hopefully] earn more than $1,059 per week. However, many smaller organizations utilize the FLSA’s white-collar exemptions to compensate part-time chief officers and other high-level employees. The DOL’s impending minimum salary increase will very likely impact those organizations. In fact, my friend and colleague Curt Varone addressed that topic earlier this year on his Fire Law Blog. For more information on that, please find that post below.
However, the anticipated increase in the minimum salary necessary to classify an employee overtime exempt under the highly compensated employee exemption could have a significant impact on many full time overtime exempt fire officers. Currently, there is a huge debate surrounding the application of any of the white-collar exemptions on senior fire officers. The debate mostly centers around whether the fire officer’s primary duty is acting as an executive of the department or a first responder. However, in a few court decisions, the fire officer’s salary was critical in determining the officers could be classified as overtime exempt.
In 2020, the United States Court of Appeals for the Fourth Circuit upheld a decision that found a group of battalion chiefs from Chesapeake, Virginia were overtime exempt partly due to the highly compensated employee exemption. Coincidently, a quick review of the record in that case finds that none of these chiefs earned more than $143,988 at the time of that decision. Another earlier district court decision (also out of Virginia) also found that senior fire officers were overtime exempt partly due to the highly compensated employee exemption. Although that decision was eventually overturned by a higher court.
Professionals responsible for managing exempt fire officers are wise to stay apprised of the DOL’s progress and the overall timeline for implementation. Proactive employers should consider all possible options prior to the actual increase, since the DOL is not bound to follow any official timeline in making these changes. These changes could be implemented in early 2024. Possible options may include converting some fire officers from salary exempt to hourly non-exempt, increasing some officers’ annual salary to stay in line with the new regulations, or moving to other forms of overtime compensation [i.e., Fluctuating Workweek]. Additionally, consider conducting an audit of all the organization’s exempt employee’s essential job duties to ensure that the employee’s “primary duty” is consistent with the FLSA and DOL regulations pertaining to the white collar exemptions. Very often an employee’s actual job duties differ from a generic job description that might have been drafted years ago.
In the meantime, there will be no shortage of litigation in this area of the FLSA. The City of Orlando, Arlington, TX, and Cobb County, GA, are all embroiled in litigation over unpaid overtime for fire officers.
This topic will be discussed much more in-depth this Wednesday at 1 PM, during the live webinar entitled: Advanced FLSA: Fire Officers and Overtime. This is the last time this webinar will be offered in 2023. Please join us.
Here is more on this from the DOL.
Also, here is more on utilizing the FLSA’s white collar overtime exemptions for part-time fire chiefs from Curt Varone’s Fire Law Blog.