The US Department of Labor (DOL) recently released its proposed new overtime regulations, wherein the DOL proposed the following changes to the white collar exemption:
- The minimum salary threshold for the FLSA “white collar” overtime exemption would increase from $23,660 per year to $35,308 per year (or $679 per week);
- Employers will be permitted to use an employee’s nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new standard salary level;
- The total annual compensation requirement for highly compensated employees would increase from $100,000 per year to $147,414 per year; and
- The salary threshold will be updated once every three years.
There are no proposed changes to the duties test for the white-collar exemptions (i.e. administrative, executive, or professional exemptions.
It is important to remember – this is not the final rule. It is only a proposal and must go through a lengthy review process.
The proposed rule will be open to public comment (60-day comment period) after which time the DOL may or may not revise the rules. The final step will be the publication of the final rules. It is difficult to predict when the final rules, if adopted, will take effect.
In the meantime, it is strongly recommended that employers start thinking about how this change could impact their current exempt workforce.