On Tuesday, the U.S. Department of Labor released its proposed rule to change overtime regulations. The focus of the proposed change is to increase the minimum salary threshold under the “white collar” exemptions from $23,660 to $50,440 per year. Thus, under the commonly-used executive, professional, and administrative exemptions, an employer must pay the employee a minimum of $50,440 per year (or $970 per week), in addition to the employee satisfying the job duty requirements for the respective exemption. The proposed change is expected to increase the number of employees eligible for overtime in the U.S. by at least 5 million.
Notably, the DOL did not yet propose any modifications to the job duties tests for those exemptions, nor did they propose a minimum amount or percentage of time that an employee must be engaged in the exempt job duties. Some prognosticators had anticipated the DOL adopting a rule similar to California state-law requirements mandating that the employee be engaged in exempt job duties more than 50% of the time, but such a requirement was not included in the proposal. Addressing the fact that the salary threshold had only been increased one time since 1975, the proposed rule also discussed a framework by which the salary threshold would be automatically updated to keep up with inflation and not become outdated.
The Department of Labor will begin the process of accepting comments to the proposed rule and work with the White House on finalizing any permanent change. The objective for the White House would be to finalize and implement the rule sometime in 2016 before President Obama leaves office.