In August 2015, we reported that the U.S. Department of Labor ("DOL") issued a Proposed Rule that seeks to increase the salary level required before an employee can be considered exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act ("FLSA"). The DOL received over 250,000 comments on the impact of the Proposed Rule from various stakeholders. Last week, the DOL indicated that the Final Rule will be issued in July 2016.
Under current regulations, an exempt employee must be paid at least a minimum salary of $455 per week / $23,660 per year. In contrast to the lower salary-level, the Proposed Rule seeks to raise the minimum salary level for an exempt employee from $455 per week / $23,660 per year to $970 per week / $50,440 per year. The Proposed Rule also provides a mechanism to automatically update this minimum salary level on an annual basis using either a fixed percentile of wages or the Consumer Price Index. Assuming the Proposed Rule is adopted as written, unless an employee earns $970 per week / $50,440 per year, employers must classify the employee as a non-exempt employee and pay him or her overtime pay for all hours worked in excess of forty in a given workweek.
With time to plan before the Final Rule is released in July 2016, all employers should (1) identify all positions classified as exempt on the organizational chart and be prepared to begin paying these employees overtime pay or adjust their salaries to meet the new salary level, (2) review all timekeeping procedures to ensure that formerly exempt employees now record their time on a daily basis, (3) review all off-the-clock time and travel time requirements for newly non-exempt employees, and (4) consider how to communicate these changes to employees who feel that they are "professionals" who have "earned" the designation "exempt employee" because of their education, training, or experience.