Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On July 6, 2015, the proposed rule issued by the Department of Labor to revise the “white collar” overtime exemptions was published in the Federal Register, available here. The DOL has established a 60-day period for the public to submit written comments to the proposed rule. The comments are currently due on or before September 4, 2015 (the Friday before Labor Day) and should be submitted either electronically through the Federal eRulemaking Portal at http://www.regulations.gov or by mail addressed to Mary Ziegler, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue N.W., Washington, DC 20210.
The DOL has identified three primary goals associated with its proposal: (1) to update the current salary level to ensure that the Fair Labor Standard Act’s intended overtime protections are fully implemented, and “to simplify the identification of non-exempt employees;” (2) to provide a mechanism to "automatically updat[e] the salary level to prevent the level from becoming outdated with the often lengthy passage of time between rulemakings;” and (3) to determine whether revisions to the current duties tests are necessary.
As we previously reported here, the primary change to the current regulations presented in the proposed rulemaking is an increase in the minimum salary levels required to qualify for many of the “white collar” exemptions. In particular, the DOL recommends setting the minimum salary level for the administrative, executive and professional exemptions at the 40th percentile of weekly earnings for full-time employees or $921 per week or $47,892 annually. The DOL estimates that by the time the final rule is issued in 2016, this amount will increase to $970 per week or $50,440 per year. In addition, the DOL proposes raising the compensation requirement needed to qualify for the highly compensated employee exemption to equal the 90th percentile of weekly earnings, or $122,148 annually.
Under the DOL’s proposal, these minimum salary levels will be adjusted upwards on an annual basis using either the percentile of weekly earnings or inflation. The Obama Administration estimates that with these changes, over 4.5 million workers will become eligible for overtime, with that number increasing going forward as the minimum salary level increases.
Although the DOL has not made any specific proposals revising the duties test, it has requested public comment on whether changes should be made to the duties test and – if so – what they should be. With this, the DOL has indicated to the regulated community that – although not yet described – additional, significant changes could be on the horizon when the final rule is published.