Action Item: The U.S. Department of Labor
("DOL") has announced its much-anticipated proposed
regulations regarding "white collar" exemptions to the
Fair Labor Standards Act ("FLSA"), which, if implemented,
would substantially raise the minimum salary threshold and impact
millions of workers.
As we detailed in a
previous alert, in March 2014, President Obama directed the
secretary of labor to propose revisions to "modernize and
streamline" the white collar exemptions to the FLSA's
minimum wage and overtime pay requirements. The current regulations
exempt salaried employees who are paid a minimum of $455 per week
($23,660 per year) and who qualify as executive, professional,
outside sales, and/or computer employees.
On June 30, 2015, the DOL released a Notice of Proposed Rulemaking
("NPRM") in response to President Obama's directive.
If implemented, the proposed rule would more than double the salary
amount necessary to qualify for the FLSA's white collar
exemptions, increasing the threshold to $970 per week ($50,440 per
year). Further, this increased salary requirement would impact
approximately five million workers nationwide. The NPRM also
proposes that the salary basis automatically adjust in the future
to keep pace with inflation or by remaining tied to the 40th
percentile of weekly earnings of salaried employees that was used
to calculate the new threshold. While the NPRM does not propose
changes to the job duties tests for the white collar exemptions,
the DOL has solicited comments to determine whether these tests are
working as intended or if updates are necessary.
The proposed rule is expected to be published in the Federal
Register in the next few days. Once published, the proposed rule
will be subject to a 60-day comment period, after which the DOL
will review the comments and issue a final rule.
We will continue to monitor and update you on the proposed
regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
