The Department of Labor is expected to announce its final rule regarding the white collar overtime exemptions under the Fair Labor Standards Act tomorrow at an event in Ohio attended by Vice President Joe Biden and Secretary of Labor Thomas Perez. The final rule is expected to be published in the Federal Register soon, perhaps as early as tomorrow.
Under the revised rule, the minimum annual salary level threshold to qualify for the exemption will be increased to $47,500, with automatic annual updates. We anticipate the highly compensated salary threshold will also be increased. No changes to the current duties test are anticipated in this rule.
This rule is significant and will substantially impact those clients with a high number of employees currently treated as exempt and paid less than the new salary threshold. This rule may have a significant impact on government contractors, given the overall compliance environment and the pending "Fair Pay and Safe Workplaces" final rule, which is also anticipated to be released soon. Among other things, these revisions, when effective, may create a basis for contractors to seek a price or equitable adjustment in existing contracts. They also suggest that government contractors should factor these new requirements into their bid and proposal strategies.