DOL’s Proposed Amendments Increase Salary Requirement for Exempt Employees

Amendments Likely to Be Implemented in 2016 Extend Overtime Rights to Millions of Employees

On June 30, 2015, the U.S. Department of Labor released its proposed amendments to the Fair Labor Standards Act's ("FLSA") "white collar" exemption tests for executive, administrative, and professional employees (located in 29 CFR Part 541). The proposed rule would more than double the annual salary required for an employee to be considered exempt from overtime pay or the minimum wage under the FLSA's white collar exemptions.

Currently, the white collar exemptions in 29 CFR Part 541 require employers to pay a salary of at least $455 per week ($23,660 annually) and employees to perform certain exempt duties in order to remain FLSA-exempt. Significantly, the proposed amendments would increase the salary basis test from $455/week to $970/week ($50,440 annually) beginning in 2016.

This new salary represents the 40th percentile of earnings for all full-time salaried workers throughout the United States. Unlike the 2004 regulations, the new salary threshold will not remain static. Each year, the salary requirements will be automatically updated to correspond to the 40th percentile amount.

Since the 60-day notice and comment period for these Department of Labor’s proposed has expired, these rules are expected to go into effect some time in 2016. If adopted, the DOL estimates that the new regulation will eliminate the exempt status for approximately 21.4 million employees.

Questions About Whether You Are Properly Classified as a Salaried-Exempt Employee?

It is possible to be misclassified as a salaried-exempt employee, and therefore improperly denied your rights to overtime pay and minimum wages. The Nolan Law Office carefully monitors state and federal laws and can advise you regarding your proper classification and legal rights. Contact us if you are concerned about your classification or method of pay.