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The U.S. Department of Labor (USDOL) announced its much anticipated proposed rule on June 30, 2015 that would revise the regulations concerning the Fair Labor Standard Act’s (FLSA) minimum salary test for white collar exemptions. The proposed rule, according the USDOL announcement would “extend overtime protections to nearly 5 million white collar workers within the first year of its implementation.” One of the major changes included in the proposal calls for an increase in the minimum salary level for the executive, administrative, and professional exemptions from $455 per week—$23,660 annually—to a salary not less than $921 per week, annualized to $47,892. The proposed amount is based upon the 40th percentile of 2013 weekly earnings for full-time salaried employees.
It is projected, however, that by the first quarter of 2016, the 40th percentile salary level will increase to $970 a week annualized to $50, 440. The proposed rule also increases the minimum salary exemption for highly compensated employees from $100,000 to $122,148 a year. The rule additionaly proposes a mechanism to automatically update the minimum salary threshold test on an annual basis using either a fixed percentile of wages or the CPI-U (Consumer Price Index-All Urban Consumers).
The USDOL did not make any proposals regarding the various “primary duties” tests but is requesting comments on whether or not the current tests allow exempt employees to perform excessive amounts of non-exempt work and maintain their exemption status.
CAI expects the revisions to be published in the Federal Register soon. Once published, the proposal has a comment period that ends 60 days after publication. To read this proposed rule, click here. Employers interested in making comments to this rule once it is posted should go to www.regulations.gov. Only comments received during the comment period identified in the Federal Register published version of the Notice of Proposed Rule Making (NPRM) will be considered part of the rulemaking record.
Employers will need to examine their exempt positions to determine how many would meet this new minimum salary test for maintaining exemption under the FLSA. Decisions will need to be made, either increase salary levels or re-classify those positions that don’t meet the new requirement to non-exempt positions.
CAI will keep you posted of further developments regarding this proposed rule. Should you need assistance with exempt / non-exempt determinations please give us a call at Advice & Resolution.