It’s time to move on from denial: those changes to the Fair Labor Standards Act that seemed so far off are now potentially just around the corner. Last week, the US Department of Labor (“DOL”) submitted the final draft of its changes to the Fair Labor Standards Act’s “white collar exceptions” to the Office of Management and Budget (“OMB”) for final review. While the OMB’s review can take up to 90 days, there’s an expectation that they will expedite the review process for these rules. This is the final step before publication of the final regulations, which could potentially become effective thirty days after publication.
Depending on how deep your denial, you may or may not recall that the proposed rules called for more than doubling the minimum salary to be eligible for exempt status under the professional, executive, or administrative categories – from $23,660 per year ($455 per week) to $50,440 per year ($970 per week). At this time it’s unknown whether those numbers have changed, and it’s unknown whether the final rules will include additional changes to the exemptions’ duties tests – a topic on which the DOL specifically invited comments during the proposal phase.
It’s fair to reason that employers could be left scrambling to respond to surprises in the final rules. An increase in the minimum salary, however, will not be a surprise, and is the one thing you can begin to plan for now. Employers with exempt employees need to have in place a strategy for addressing exempt employees who earn less than the DOL’s final minimum salary (currently proposed at $50,440 per year), whether that plan calls for reclassifying those individuals as nonexempt – which might require wage restructuring – or instituting a wage increase. And employers should begin thinking through a plan to implement and communicate these changes (and any administrative requirements, such as time tracking, that accompany those changes).