Will the FLSA Regulations for Exempt Employees Apply to Puerto Rico Operations?

On August 30, 2023, the United States Department of Labor, Wage and Hour Division, released a Notice of Proposed Rulemaking (NPRM) to update and revise the regulations under the federal Fair Labor Standards Act regarding exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The proposed revisions include a significant increase in the standard salary level triggering exemption for these categories of employees to $1,059 per week ($55,068 annually for a full-year worker) and also increases the highly compensated employee total annual compensation threshold to $143,988. As discussed in greater detail here, these figures are based on 2022 data, and the agency predicts that the salary levels that will ultimately be included in the final rule will be much higher. The agency is also proposing to add to the regulations an updating mechanism that would result in the automatic adjustment of these earnings thresholds every three years, based on then-current data. 

The agency is proposing that, except for American Samoa, said increases also apply in the U.S territories, including Puerto Rico. In the particular case of Puerto Rico, it is important to note that the standard salary threshold has not changed since 2004 and currently stands at $455 per week. The last time the salary rule was revised in 2019, the agency elected to preserve the $455 per week amount for employees in Puerto Rico, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands instead of applying the then-new and current standard salary level of $684 per week that applies to employees in the 50 states and the District of Columbia. Given the current state of affairs in Puerto Rico, employers with operations on the Island should continue to monitor developments since there is a possibility that the Financial Oversight and Management Board for Puerto Rico will recommend the exclusion of Puerto Rico from the Final Rule consistent with the objectives of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), as has occurred in the past.

The NPRM has invited interested persons to submit written comments on this NPRM on or before 60 days from the date of publication in the Federal Register, through either of the following methods: (1) Electronic Comments: through the Federal eRulemaking Portal at https://www.regulations.gov following the instructions therein, or (2) Mail: addressing written submissions to: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washington, DC 20210. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.