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Labor Department Announces Changes to FLSA White Collar Overtime Exemption Rules

On June 30, 2015 the Department of Labor “DOL” released their long awaited proposed rule changes to the Fair Labor Standards Act or “FLSA” white collar overtime exemptions. The FLSA requires most employers to pay their employees at least minimum wage for each hour worked and to provide overtime pay at the rate of time-and-a-half for any hours worked in excess of 40 hours per week, with certain exemptions. One of these exemptions is commonly known as the “white collar” exemption. Currently, for an employee to qualify as exempt from the FLSA under the white collar exemption the employee must satisfy certain job duties and receive a minimum weekly salary. 

Under the current white collar exemption the minimum salary an employee must be paid is $455 per week which equates to $23,660 per year. This threshold has not been changed since 2004. The proposed rule change would increase the minimum salary to $970 per week or $50,440 per year. The proposed rule also includes a mechanism that would automatically update the salary level on an annual basis so there are not long gaps in between increases, as is the case now. The exact mechanism DOL would use calculate automatic annual updates is not settled in the proposed rule changes. The proposed rule does not change the duties test of the white collar exemption. 
Even though any changes to this rule are not likely to take effect until some time in 2016 employers should plan now to avoid scrambling later. In the past DOL has given as little as a 120 day window for employers to comply with FLSA rule changes once they takes effect. Violations of the FLSA can be extremely costly for employers. 
If you are an employer and need help reviewing your employees classification status under the FLSA or are currently facing litigation under the FLSA we would be happy to help you. Please contact our office at 386-257-1222 to schedule a consultation.