Updates to FLSA White Collar Exemption Requirements Announced

Following a directive from President Obama, the Department of Labor has proposed changes to the federal Fair Labor Standards Act (FLSA) rules regarding the executive, professional, and administrative exemptions (also called the white collar exemptions) (published July 6, 2015).

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Under the proposed rule, the annual salary requirement for a white collar exempt employee would more than double to approximately $50,440. This more-than-doubling of the salary requirement would mean that approximately five million workers who are currently exempt from overtime and minimum wage requirements would no longer qualify for an exemption.

In addition to the white collar salary requirement increasing, the proposed rules call for the salary requirement for exempt highly compensated employees to increase from $100,000 to about $122,000 per year. Finally, the rules contain a mechanism by which both the white collar and highly compensated employee salary requirements will adjust annually.

Before these proposed rules can go into effect, there will be a notice and comment period, followed by time for the Department of Labor to review and respond to comments and draft final rules. The last time large revisions were made to the FLSA, in 2004, 13 months elapsed between the introduction of the proposed rules and the release of the final rules.

As before, we expect a large number of comments and much opposition from the business sector, and therefore a similarly long span of time before the rules are finalized. While it will likely be mid-to-late 2016 or even early 2017 before any changes to the FLSA white collar exemptions go into effect, given the sizeable increase to the salary requirement, we recommend employers begin to consider how they will handle the new requirements in their organization.

Visit the Department of Labors Website: http://www.dol.gov/featured/overtime/

The Notice of Proposed Rulemaking (NPRM) published on July 6, 2015 in the Federal Register (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov on or before September 4, 2015. Only comments received during the comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.

Source: Payroll Masters HR Support Center – HR Advisor Newsletter

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This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please contact your employment attorney in connection with any fact-specific situation in which you intend to take significant employment action. Readers agree that they will not hold Payroll Masters in indemnity and Payroll Masters assumes no liability. Payroll Masters is not engaged in rendering legal or accounting services. Therefore, Payroll Masters assumes no responsibility for claims arising from the use or implementation of the above information. 

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