The U.S. Department of Labor has issued its Final Rule setting forth a new salary threshold for the white collar exemption to the minimum wage and overtime requirement of the Fair Labor Standards Act. Effective December 1, 2016, the standard salary threshold for the white collar exemption will increase from $455 per week ($23,660 per year) to $913 per week ($47,476 per year), making an estimated 4.2 million American workers eligible for overtime when they work more than 40 hours in any work week. The DOL predicts that this change will result in more than $1.2 billion in additional wages paid to employees each year.
Articles Discussing Overtime Exemptions Under The FLSA.
Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-Tenn.) has announced that he will soon introduce a Congressional Review Act resolution to block implementation of the Department of Labor’s final overtime rule. (For details of the Final Rule, see our article, Labor Department Announces Final Rule Amending Overtime Regulations for ‘White Collar’ Workers.)
Executive Summary: Today, the U.S. Department of Labor (DOL) will publish its long-awaited Final Rule amending the “white collar” exemption tests for executive, administrative, and professional employees (located in 29 CFR Part 541) under the Fair Labor Standards Act (FLSA). These new regulations increase the threshold minimum salary to $913 per week ($47,476 annually), doubling the annual salary previously required for an employee to be considered exempt from overtime under the FLSA’s white collar exemptions. The regulations also increase the minimum salary threshold under the “highly-compensated” exemption to $134,004 annually. Although the Final Rule does not change the current duties test, it contains a mechanism to automatically adjust the minimum salary thresholds every three years. The regulations are to become effective by December 1, 2016.
Late yesterday the White House and Department of Labor released key details of the new FLSA overtime exemption rules for white collar workers. The final rules themselves have just been released this morning. We are still digesting 500-plus page final rules, but the key points are as follows:
The U.S. Department of Labor has released its long-awaited Final Rule updating regulations under the Fair Labor Standards Act governing overtime exemptions for executive, administrative, and professional employees, commonly known as the “white collar exemptions” or “EAP exemptions.” The Final Rule is scheduled to be published in the Federal Register on May 23, 2016.
Today, the Obama administration and Secretary of Labor Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations under the FLSA.
News outlets are reporting that the new salary basis rule will take effect on December 1, 2016, and require a salary of $47,476 per year ($913/week). Reports also indicate that the new rule will require an update of the salary threshold every three years, as opposed to annual increases. This effective date provides employers a longer period to analyze and comply with the new rule than previously anticipated, as prior reports had indicated the rule might take effect as early as 60 days after publication.
By now, most employers are aware that new DOL regulations concerning white collar exemptions to the Fair Labor Standards Act are imminent. The DOL’s final regulations may introduce sweeping changes that will affect employers and employees nationwide, possibly allowing as few as 60 days to comply. Littler shareholders Rich Black and Josh Waxman discuss the potential new regulations and the importance of internal communications and messaging associated with the new regulations and any resulting reclassification.
With publication of the Department of Labor’s final overtime rule imminent, Littler Principal Tammy McCutchen testified before the Senate Committee on Small Business and Entrepreneurship on May 11, 2016, about how the proposed changes will disproportionately and negatively impact small businesses and nonprofit entities. McCutchen (who was the DOL’s Wage and Hour Administrator from 2001 to 2004 and oversaw the last amendment to the Fair Labor Standards Act’s overtime rules), fielded questions about the DOL’s proposed 113% increase in the minimum salary level triggering the “white collar” exemption, possible automatic increases to this level, and the rulemaking process itself.
As employers try to figure out how to cope with the coming increase in the minimum salary for the executive, administrative and professional employees, some find themselves with job classifications where the salary scale straddles the new line between exempt and non-exempt. Can employers in this situation categorize employees whose compensation falls below the line as non-exempt, while treating those with the same job title but with higher salaries as exempt?
The wait is nearly over to find out what the Department of Labor’s final rule revising white collar overtime exemption regulations will require. In this podcast, Littler shareholder, Tammy McCutchen, Esq., discusses the likelihood of different changes, as well as the potential timing of the Final Rule and its impact on employers. Tammy explores the following frequently asked questions:
Disagreeing with a sister circuit, the U.S. Court of Appeals for the Fourth Circuit has held that insurance fraud investigators were misclassified as exempt from overtime pay under the administrative exemption of the Fair Labor Standards Act, signaling that it will construe the exemption narrowly. Calderon v. GEICO General Insurance Co., 2015 U.S. App. LEXIS 22546 (4th Cir. 2015).
Earlier this week, the U.S. Court of Appeals for the Ninth Circuit issued an unpublished decision affirming summary judgment in favor of Wynn Las Vegas with respect to overtime claims asserted by a Slot Marketing Executive Host. Dannenbring v. Wynn Las Vegas, LLC, 2016 U.S. App. LEXIS 5715 (9th Cir. Nev. Mar. 28, 2016).
Executive Summary: On Tuesday, March 15th, the US Department of Labor (DOL) sent to the White House’s Office of Management and Budget (OMB) its Final Rule revising the White Collar Exemption Regulations, which will likely expand overtime eligibility for millions of workers. Typically, the OMB review takes anywhere from 30 to 60 days. Therefore, the Final Rule could be published at any time in the next couple of months.