Proposal: The US Department of Labor (DOL) issued a proposed rule that would expand federal overtime pay regulations to cover nearly five million additional workers. The rule would raise from $23,660 to $50,440 the minimum annual salary threshold required for employees to qualify under the Fair Labor Standards Act’s overtime exemption for executive, administrative, professional, outside sales and computer employees, known as the “white collar exemptions.” It also would implement a mechanism that would automatically update the threshold salary level on an annual basis. Finally, the DOL solicited public comments on whether changes are necessary to the duties test currently used to determine whether the white collar exemptions apply to any particular employee. The proposed rule was published in the Federal Register on July 6, 2015. Interested parties may submit written comments on the proposed rule at on or before September 4, 2015.

Impact: In preparation for implementation of the proposed rule, employers should assess how the increased salary threshold will affect their current workforce and begin developing a plan to roll out any changes, including communications to employees about who will be affected and how. Affected employees and their managers also will likely need to be trained on modified recordkeeping and other timekeeping policies, including policies regarding the use of electronic devices for work purposes during off-duty time. Employers also should remember to review any applicable state overtime laws, which often make fewer employees exempt from overtime pay than the FLSA. Employers also should keep in the DOL’s recently issued guidance that most workers are employees under the FLSA’s broad definitions. The DOL’s position on the breadth of those definitions could impact the proper classification of certain workers as employees rather than independent contractors, thereby making eligible for overtime under the proposed rule.