The federal Fair Labor Standards Act (“FLSA”) imposes numerous obligations on employers, including payment of a minimum wage for all employees and overtime pay for non-exempt employees. On June 30, 2015, more than one year after President Obama directed the federal Department of Labor (“DOL”), which enforces the FLSA, to overhaul the overtime regulations for the first time since 2004, the DOL has released its proposed updates to those regulations.
The proposed rule revises the regulations governing the executive, administrative, and professional (“white collar”) employees exemptions from the FLSA’s overtime requirement in three significant ways. First, the proposed rule would raise the minimum salary threshold needed to qualify under these exemptions from $455 per week (or $23,660 annually) to $921 per week (or $47,892 annually). Second, it would increase the total annual compensation required to qualify as an exempt “highly compensated” employee from $100,000 to $122,148. Finally, it would establish a mechanism for automatically updating the salary and compensation levels going forward.
The proposed rule does not impose a percentage-based “duties test” as some commentators forecasted. Instead, the DOL requests suggestions and comments on what, if any, changes should be made to the current test, including whether the DOL should look to a percentage-based test as a model.
Similarly, the DOL seeks comments on whether nondiscretionary bonuses should be counted towards the minimum salary threshold, and whether to add examples of additional occupations to provide guidance in administering the “white collar” exemptions, particularly for computer-related fields.
You can find more information about the proposed rule, including the deadline and procedures for submitting comments, here.