The U.S. Department of Labor just released its highly anticipated proposed revisions to the “white collar” exemptions to the Fair Labor Standards Act, which will significantly expand the number of workers who will be eligible for overtime pay. In fact, it is estimated that approximately 5 million additional workers in the United States, who are currently exempt under the FLSA, will now be entitled to overtime.
The primary change to the FLSA is the nearly doubling of the salary threshold for exempt employees from $455 per week to $921 per week. This means is that in order for an employee to be exempt from the overtime requirements of the FLSA, they must not only meet the necessary exempt duties test (which appear to have remain unchanged), but they must also be compensated at least $47,892 per year. The DOL added that the final regulations may actually increase the proposed salary threshold to $970 a week, or $50,440 a year.
Another update relates to “highly compensated” workers and, specifically, that in order to qualify as exempt under the FLSA “highly compensated” employee exemption, a full-time salaried worker must make at least $122,148 annually, as opposed to $100,000 annually.
Significantly, the DOL is also proposing to automatically update the salary levels for exempt employees on an annual basis in order to prevent these new salary level thresholds from becoming outdated. The DOL, however, is seeking comments on methods of increasing the salary threshold before implementing the final rules. These updated FLSA regulations are set to go through a comment period before becoming final, most likely in late 2015 or early 2016. Employers should therefore be preparing now for these updated regulations and promptly evaluate whether any existing exempt employees must now be reclassified as non-exempt and entitled to overtime.