The federal Department of Labor (“DOL”) released a proposed rule to amend the Fair Labor Standards Act’s white-collar employee exemptions (i.e., executive, administrative, professional, outside sales, and computer professional) and the highly compensated employee exemption. The rule focuses on the salary thresholds for these exemptions, seeking to increase the white-collar salary minimum from $23,660 to $50,440 (the 40th percentile of weekly earnings for full-time salaried workers) and the highly compensated employee salary minimum from $100,000 to $122,148 (the 90th percentile of weekly earnings for full-time salaried workers), with annual adjustments based on the Consumer Price Index or the percentile of weekly earnings for full-time salaried workers.
Although there are no proposed changes to the duties tests for these exemptions, the DOL has invited public comment regarding what changes (if any) should be made to the duties tests, whether exempt employees should be required to spend a minimum amount of time performing work that is their primary duty, and whether the DOL should look to California law (principally, the requirement that 50 percent of an employee’s time be spent on work that is the employee’s primary duty), among other questions.
A final rule is expected in 2016. The DOL estimates that nearly five million white-collar exempt workers will lose exempt status and therefore be eligible for overtime within the first year of the rule’s implementation. In the interim, employers should assess their workforces and determine which positions may become non-exempt in light of the salary increases alone.