Print

DOL Releases Proposed Rule to Update Minimum Wage and Overtime Exemptions For "White Collar" Workers

Volume 14, Issue 13
June 30, 2015

Today, the U.S. Department of Labor (DOL) released the details concerning its long awaited proposal to update the regulations governing the minimum wage and overtime exemptions for executive, administrative, and professional employees (white collar workers) under the Fair Labor Standards Act (FLSA). The DOL last updated these regulations in 2004. With this proposed rule, the DOL seeks to increase the minimum salary threshold necessary to qualify for the white collar exemptions to $50,440, as well as make the white collar exemptions easier for employers and workers to understand and apply.

Specifically, pursuant to its Notice of Proposed Rulemaking (NPRM), the DOL proposes to:

  • raise the minimum salary threshold for exempt white collar employees from $455 a week ($23,660 per year) to about $970 a week ($50,440 per year) in 2016;
  • increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
  • establish a mechanism for automatically updating these minimum salary/compensation thresholds going forward to ensure they remain meaningful tests for distinguishing between bona fide executive, administrative, and professional workers who are not entitled to overtime and overtime-protected white collar workers.

In addition, the DOL reviews the current duties tests for exempt while collar workers and solicits suggestions for additional occupation examples and comments on the current requirements. The DOL also seeks comment on the possibility of including nondiscretionary bonuses to satisfy a portion of the salary requirement. At this time, the DOL has not proposed specific regulatory changes on either of these issues. A Fact Sheet and FAQ are available on the agency's website, along with the NPRM.

Although the Office of Management and Budget (OMB) has approved the NPRM, the DOL's proposed rule has not yet been published in the Federal Register. The NPRM that eventually appears in the Federal Register will specify the dates of the public comment period. Interested parties can submit written comments on the proposed rule at www.regulations.gov. Only comments received during the comment period will be considered part of the rulemaking record.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.