DOL Releases Proposed FLSA Overtime Regulation Amendments

Employment Law

DOL Releases Proposed FLSA Overtime Regulation Amendments

Jul 1, 2015 | Employment Law

The Department of Labor (DOL) has just released its long-awaited Notice of Proposed Rulemaking to the white collar exemption under the Fair Labor Standards Act (FLSA). The amendments, if passed, will significantly increase the minimum salary test (from $23,660 to $50,440) for hours worked over 40 in a work week. The amendments will have far-reaching impacts on many industries that will need to reclassify many currently exempt employees and corresponding wage and hour policies.

The DOL’s proposed amendments, made public yesterday, include:

  • Establishing a mechanism for automatically updating the salary levels going forward;
  • Increasing the standard salary level at the 40th percentile of earnings for full-time salaried workers which currently is equivalent to $47,892 and projected to be $50,440 in 2016;
  • Increasing salary level for highly compensated employees to the equivalent of the 90th percentile of weekly earnings.

Noticeably missing from the proposed amendments are any proposed changes to the primary duties test. Many expected that the DOL would propose a change to the primary duties test and implement a quantitative primary duty test similar to California’s state law that would require an employee to spend more than 50% of his/her time on tasks deemed exempt. However, DOL indicates in the Notice of Proposed Rulemaking that it believes the proposed salary level increase and automatic updates may address most of the concerns so that a change in the primary duties test will not be necessary. However, DOL is seeking public comment on this issue and may change the proposed amendment to include this.

The proposed amendments were made public as of June 30, 2015. There will be a public comment period of 60 days after the amendments are published in the Federal Register and the DOL may modify them. While the proposed rules will likely not be effective until this fall or possibly early 2016, employers need to start preparing now by reviewing current classifications with a particular emphasis on an employee currently classified as exempt whose salary is less than $50,440.

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