Bulletin department of labor proposes new rule for overtime protections
2
C&G NEWS Page 1 of 2 Department of Labor Proposes New Rule Department of Labor Proposes New Rule Department of Labor Proposes New Rule Department of Labor Proposes New Rule for Overtime Protections for Overtime Protections for Overtime Protections for Overtime Protections On June 30, 2015 the U.S. Department of Labor announced a proposed rule to update the regulations governing which "white collar workers" are exempt from the Fair Labor Standard Act's minimum wage and overtime pay requirements. The proposed rule more than doubles the minimum salary threshold for the white collar exemptions to apply. As such, the DOL estimates that the proposed rule will result in nearly 5 million additional employees being eligible for overtime pay within the first year after it takes effect. White Collar Exemptions White Collar Exemptions White Collar Exemptions White Collar Exemptions The FLSA exempts executive, administrative, and professional employees from its minimum wage and overtime pay requirements. To qualify for any one of these "white collar" exemptions, the employee must (1) be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; (2) be paid more than a specified salary threshold; and (3) primarily perform executive, administrative, or professional duties, as provided in each specific "duty test." The current specified salary threshold, set in 2004, requires that an employee be paid at least $455 per week ($23,660 annually). • The proposed rule updates and increases the specified salary threshold to the 40th perce The proposed rule updates and increases the specified salary threshold to the 40th perce The proposed rule updates and increases the specified salary threshold to the 40th perce The proposed rule updates and increases the specified salary threshold to the 40th percentile ntile ntile ntile of weekly earnings for full of weekly earnings for full of weekly earnings for full of weekly earnings for full-time salaried workers. Assuming that the regulations will go time salaried workers. Assuming that the regulations will go time salaried workers. Assuming that the regulations will go time salaried workers. Assuming that the regulations will go into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 per week ($50,440 annually for a full per week ($50,440 annually for a full per week ($50,440 annually for a full per week ($50,440 annually for a full-year worker). year worker). year worker). year worker). The DOL is not currently proposing any specific changes to the standard duties tests, but is seeking comments on whether the current duties tests are working as intended to screen out employees who are not bona fide "white collar" employees. Based on the comments the DOL is seeking, it appears that the DOL is considering modifying the duties tests to require that employees spend a specific minimum amount of time, such as 50%, performing their primary exempt duty to qualify for the exemption. The DOL also is seeking comments as to whether to allow nondiscretionary bonuses, such as certain production or performance bonuses, to satisfy a portion of the specified salary threshold requirement.
-
Upload
cohengrigsby -
Category
Documents
-
view
53 -
download
0
Transcript of Bulletin department of labor proposes new rule for overtime protections
C&G NEWS
Page 1111 of 2222
Department of Labor Proposes New Rule Department of Labor Proposes New Rule Department of Labor Proposes New Rule Department of Labor Proposes New Rule for Overtime Protectionsfor Overtime Protectionsfor Overtime Protectionsfor Overtime Protections
On June 30, 2015 the U.S. Department of Labor announced a proposed rule to update the regulations governing which "white collar workers" are exempt from the Fair Labor Standard Act's minimum wage and overtime pay requirements. The proposed rule more than doubles the minimum salary threshold for the white collar exemptions to apply. As such, the DOL estimates that the proposed rule will result in nearly 5 million additional employees being eligible for overtime pay within the first year after it takes effect.
White Collar Exemptions White Collar Exemptions White Collar Exemptions White Collar Exemptions
The FLSA exempts executive, administrative, and professional employees from its minimum wage and overtime pay requirements. To qualify for any one of these "white collar" exemptions, the employee must (1) be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; (2) be paid more than a specified salary threshold; and (3) primarily perform executive, administrative, or professional duties, as provided in each specific "duty test." The current specified salary threshold, set in 2004, requires that an employee be paid at least $455 per week ($23,660 annually).
• The proposed rule updates and increases the specified salary threshold to the 40th perceThe proposed rule updates and increases the specified salary threshold to the 40th perceThe proposed rule updates and increases the specified salary threshold to the 40th perceThe proposed rule updates and increases the specified salary threshold to the 40th percentile ntile ntile ntile of weekly earnings for fullof weekly earnings for fullof weekly earnings for fullof weekly earnings for full----time salaried workers. Assuming that the regulations will go time salaried workers. Assuming that the regulations will go time salaried workers. Assuming that the regulations will go time salaried workers. Assuming that the regulations will go into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 into effect by the end of the year, the DOL estimates that the 2016 level may be about $970 per week ($50,440 annually for a fullper week ($50,440 annually for a fullper week ($50,440 annually for a fullper week ($50,440 annually for a full----year worker).year worker).year worker).year worker).
The DOL is not currently proposing any specific changes to the standard duties tests, but is seeking comments on whether the current duties tests are working as intended to screen out employees who are not bona fide "white collar" employees. Based on the comments the DOL is seeking, it appears that the DOL is considering modifying the duties tests to require that employees spend a specific minimum amount of time, such as 50%, performing their primary exempt duty to qualify for the exemption. The DOL also is seeking comments as to whether to allow nondiscretionary bonuses, such as certain production or performance bonuses, to satisfy a portion of the specified salary threshold requirement.
Page 2222 of 2222
HighlyHighlyHighlyHighly----Compensated Worker ExemptionCompensated Worker ExemptionCompensated Worker ExemptionCompensated Worker Exemption
The FLSA also exempts "highly-compensated" workers from its minimum wage and overtime requirements. To qualify for this exemption the employee must (1) have more than a specified annual compensation level, as set by the DOL; and (2) customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee. The current required annual compensation level is $100,000.
• The proposed rule updates and increases the required annual compensation level to the 90th The proposed rule updates and increases the required annual compensation level to the 90th The proposed rule updates and increases the required annual compensation level to the 90th The proposed rule updates and increases the required annual compensation level to the 90th percentile of earpercentile of earpercentile of earpercentile of earnings for fullnings for fullnings for fullnings for full----time salaried workers. Based on current salary levels, the time salaried workers. Based on current salary levels, the time salaried workers. Based on current salary levels, the time salaried workers. Based on current salary levels, the minimum threshold would increase to $122,148.minimum threshold would increase to $122,148.minimum threshold would increase to $122,148.minimum threshold would increase to $122,148.
Automatic Updating of Minimum Salary LevelsAutomatic Updating of Minimum Salary LevelsAutomatic Updating of Minimum Salary LevelsAutomatic Updating of Minimum Salary Levels
The DOL also proposes including in the regulations a mechanism to automatically update the salary and annual compensation thresholds on an annual basis, by using either a fixed percentile of wages or the Consumer Price Index for all Urban Consumers. It is seeking comments on both methods of updating.
ComplianceComplianceComplianceCompliance
This proposed rule will not take effect until the comment period concludes and the Department issues its final regulations. While it is possible this may occur in 2015, we anticipate the final regulations taking effect in 2016. We will keep you apprised of these developments as they occur.
Please keep in mind that the FLSA provides minimum standards, and does not preempt a state from establishing more protective standards. If a state has or establishes a more protective standard than the FLSA, the higher standard applies in that state.
More InformationMore InformationMore InformationMore Information
Please contact any member of the Cohen & Grigsby Labor & Employment Group at 412.297.4900 if you have any questions regarding this information. To receive future bulletins by e-mail, please send an e-mail to [email protected].
Copyright © 2015 by Cohen & Grigsby, P.C. (No claim to original U.S. Governmental material.) All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of Cohen & Grigsby, P.C. and is intended to alert the recipients to new developments in the area of labor & employment law. The hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you free written information about Cohen & Grigsby's qualifications and experience.
