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DOL Proposes Changes to FLSA White Collar Exemption Rules

The U.S. Department of Labor (DOL) has issued a proposed rule to modify the “white collar exemptions” provided by the Fair Labor Standards Act (FLSA). The white collar exemptions are minimum wage and overtime exception rules for executive, administrative, professional, outside sales, and computer employees.

Here are a few key updates of the proposed rule:

  • Raising the salary threshold from $455 a week ($23,660 a year) to a projected level of $970 per week ($50,440 annually) in 2016 (the 40th percentile of weekly earnings for full-time salaried workers) to qualify for an exemption
  • Increasing the total annual compensation requirement needed to exempt highly compensated employees to $122,148 annually (the annualized value of the 90th percentile of weekly earnings of full-time salaried workers)
  • Establishing a mechanism for automatically updating the salary and compensation levels going forward, including a method that is based on a fixed percentile of earnings for full-time salaried workers and another method that is based on changes in the Consumer Price Index

Potential Impact on Employers and Next Steps

It’s important to note that this is just a proposed rule. However, if implemented, the rule would require employers to re-determine the exemption status of employees, update and adapt overtime policies, notify employees of policy changes, and adjust their payroll systems.

The DOL has invited the general public to comment on the proposed rule. Comments can be submitted electronically by September 4th, 2015.

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Posted in: Human Resources, Legislation

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