Today, the U.S. Department of Labor (DOL) issued its much-anticipated proposed revisions to the regulations governing the “white collar exemptions” (those for executive, administrative, and professional employees) under the Fair Labor Standards Act. The purpose of the revisions is to increase the number of employees covered by the Act’s overtime requirements.
The proposed revisions raise the minimum annual salary level required to meet the applicable white collar exemption tests from $23,660 (where it has been since 2004) to $50,440. The minimum will be adjusted each year based upon the Consumer Price Index. To be eligible for one of the white collar exemptions, an employee must be paid at least the minimum salary, be paid on a salary basis, and primarily perform certain job-related duties. The DOL does not appear to have proposed any material changes to the salary basis requirements or duties tests for the exemptions. The DOL projects that this increase will make approximately 44% of white collar salaried employees no longer eligible for the exemptions.
The DOL will accept comments on the proposed regulations for sixty (60) days after publication. We do not expect any significant revisions and estimate they will go into effect in the first quarter of 2016. Employers should start developing strategies for dealing with the new regulations, including possible salary adjustments and reclassification of positions.