Proposed Revisions to “White-Collar” Overtime Exemptions
Yesterday, the U.S. Department of Labor’s Wage and Hour Division released its much anticipated proposed revisions to the “white-collar” overtime exemptions under the Fair Labor Standards Act (FLSA). The only significant proposed change is to increase the minimum salary for the executive, administrative and professional exemptions from $455 to $921 per week.
Under the current regulations, an employee is exempt from overtime pay if he or she has the “primary duty” of performing executive, administrative, or professional duties and earns a predetermined and fixed salary of at least $455 per week, or $23,660 annually. An employee is also exempt from overtime pay if he or she earns at least $100,000 in total annual compensation and performs at least some of the duties covered by the administrative, executive or professional exemptions.
Under the proposed new rules, the Department has more than doubled the standard salary level for white-collar employees to $921 per week, or $47,892 annually. The proposed salary requirement for highly compensated employees has also increased to $122,148 annually.
Notably, the Department proposes to adjust the minimum salary threshold annually based on changes in overall market wages. The salary requirements contained in the proposed new rules are based on market wages earned by workers in 2013. Because the proposed regulations would likely not become final and effective until sometime in 2016, the salary thresholds contained in the Department’s Final Rule will likely be closer to $970 per week, or $50,440 annually.
At this stage the rules are proposed, not final, and are open for public comment for 60 days. Interested parties are invited to submit written comments on the proposed rule at www.regulations.gov.
If you have questions or would like more information, feel free to contact one of Miller Johnson’s Wage and Hour Practice Group attorneys.