Our July 2015 blog, Department of Labor Publishes Long Awaited Proposed Rules Revising White Collar Exemptions to Overtime, reported that the U.S. Department of Labor had released for public comment modifications to the “white collar” exemptions to overtime pay under the Fair Labor Standards Act (FLSA). The public comment period for these proposed rules ended on September 4, 2015, and resulted in approximately 270,000 comments, which the Wall Street Journal reported was more than three times the number of comments received during a prior rule change in 2004. Employers and employees expected that the new rules would be finalized by the end of 2015 or at the latest, early 2016. However, during the American Bar Association’s Labor and Employment Law conference held in Philadelphia this month, Solicitor of Labor, M. Patricia Smith, announced that the final rules would likely not be issued sooner than late-2016. She attributed the delay to the large volume of comments received on the proposed rules, which the Department of Labor is still reviewing.
The proposed regulations provide for an increase of the minimum salary level required to qualify for the white collar exemptions to overtime pay. Currently, to qualify for the exemption, a white collar employee must be paid a salary of at least $455 per week ($23,660 per year), in addition to satisfying a duties test detailed in the regulations. The proposed modifications dispense with stating a set salary amount, and instead seek to tie the salary level requirement to the 40th percentile of weekly earnings. Assuming that the rules became effective in 2016, although 2017 is becoming more likely,that would translate to a salary level of $970 per week ($50,440 per year). The higher salary level will result in millions more employees being deemed non-exempt, and therefore entitled to overtime pay.