Department of Labor Publishes Long Awaited Proposed Rules Revising White Collar Exemptions to Overtime

The United States Department of Labor (DOL) issued its proposed rule changes to the so-called “white collar” exemptions to overtime pay on July 6, 2015.  The Fair Labor Standards Act (FLSA), which guarantees a minimum wage and overtime pay, contains an exemption to overtime pay for bona fide executive, administrative, professional, outside sales and computer employees.  To be exempt under one of these white collar exemptions, the employee must be paid on a salary (not hourly) basis and perform certain primary job duties.

Since 2004, the minimum salary level to qualify for the exemption under the FLSA has been $455 per week ($23,660 per year).  However, under New York Law, the minimum salary level is higher and is currently $656.25 per week.

According to the DOL, the proposed rule seeks to update the salary level, and to implement a mechanism by which the salary level will automatically increase without having to contend with the “lengthy passage of time between rulemakings.”  The DOL proposes that the salary level be set at the 40th percentile of weekly earnings.  For the first quarter of 2015, the 40th percentile of weekly earnings is $951 (or $49,452 per year for a full-year worker).  The DOL estimates that by the time the proposed rule becomes final in 2016, the minimum salary required would be $970 per week (or $50,440 per year for a full-year worker).

The DOL is soliciting comments until September 4, 2015 on the proposed salary test changes, and is seeking comment on whether the primary duties test should be modified as well.  The full text of the proposed rule can be accessed at the Federal Register.