USDOL proposal would double the minimum salary basis for the white collar overtime exemption, but would not simplify the duties test; liability for misclassification could become much more costly
Impact on Employers
Salaried employees must earn at least $455 per week (or $23,660 per year) to qualify as exempt from the FLSA’s minimum wage and overtime requirements. The USDOL proposal would increase that amount to $970 per week (over $50,000 per year) in 2016. Effect: a salaried employee making $40,000 and working 5 hours overtime per week could get up to $7,200 more pay for the same work.
What To Do
Review all salaried-exempt positions to determine overtime eligibility and assess the impact on your personnel costs. Employers may convert exempt jobs to hourly and restrict overtime, reduce or eliminate bonuses and/or benefits to fund needed salary increases., or defer hiring. Failure to take affirmative steps could be costly.
The DOL requests comments on issues such as whether to include more examples of exempt positions, and/or adopt a 50% primary duty test, which would have far-ranging impact for retailers with working managers.
The DOL acknowledges the difficulties in tracking hours when nonexempt employees work remotely and/or use electronic devices. The agency anticipates proposing separate regulations on this issue.