For the past decade, workers earning a guaranteed salary of at least $455.00 per week or $23,660.00 annually, in tandem with satisfying certain “duties” tests, qualified for what is commonly referred to as the white collar exemptions. As a result, these workers were ineligible to earn overtime pay. On Tuesday, June 30, 2015, the Department of Labor (“DOL”) announced its proposed rule changes to the Fair Labor Standards Act which, if adopted, will dramatically change the white collar exemptions as we know it. The result could cause employers to re-evaluate and possibly re-classify many positions within their organization. This re-classification may create a new obligation for employers to track hours worked and pay overtime to an entirely new group of employees, employees who never before were eligible for overtime pay or required to track hours worked.
The most significant change lies with the salary level requirement for the white collar exemption. The standard salary level required for the white collar exemptions was last updated in 2004. The DOL now seeks to update the salary level and increase it to $921.00 per week, or $47,892.00 annually. The proposed ruling further calls for the salary level to be continually updated on an annual basis. A salary change for the highly compensated employee, currently set at $100,000.00 annually, is also proposed to increase to $122,148.00. The proposed changes further discuss the possibility of including nondiscretionary bonuses in the calculation to satisfy a portion of the salary requirement, a change which could help employers meet the salary test.
Although the DOL has not proposed specific regulatory changes to the duties test, it has sought additional information on the duties test for consideration in the Final Rule. Areas to be explored include, but are not limited to, considering whether any changes to the duties test should be made, and if so, should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for the exemption?
We will be following this development very closely and will continue to update you once the final rule has been adopted. For questions about how this rule change will affect you or your business, please contact Deena B. Rosendahl, Esq. at 201-947-8855 or by email at Drosendahl@northjerseyattorneys.com