THE DEPARTMENT OF LABOR ISSUES THE FINAL RULE ON OVERTIME AND THE WHITE COLLAR EXEMPTION

May 18th, 2016 by JBWK

Submitted by:  Robyn H. Hansen, Esquire

On May 18, 2016, the Department of Labor (DOL) announced the final rule to update the regulations governing the exemption from the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA) for Executive, Administrative and Professional Employees (“White Collar Exemption”).  The final rule changes the salary amounts associated with the White Collar Exemption Test but not the test itself.  Unless an employee meets each prong of the following test, the employer must pay the employee 1½ times the employee’s regular rate of pay for all hours worked in excess of 40 hours in a work week.

 

  1. The employee is paid on a Salary Basis;
  2. The amount of the salary meets the minimum specified amount (“Salary Level”); and
  3. The employee’s job duties primarily involve Executive, Administrative or Professional duties as defined by the regulations (“Standard Duties Test”).

 

On July 6, 2015, the DOL published a notice of proposed rulemaking to increase the Salary Level for this White Collar Exemption.  After receiving more than 270,000 comments, the DOL has now published its final rule.

 

Final Rule – Summary of Changes:

 

  1. Increases required weekly Salary Level from $455 to $913, and increases the annual Salary Level from $23,660 to $47,476.

 

  1. Increases the annual compensation requirement for the Highly Compensated Employee (HCE) exemption subject to minimum duties test, from $100,000 to $134,004.

 

  1. Establishes an automatic update every 3 years of the Salary Level and HCE annual compensation amounts.

 

The new regulations did not change the Standard Duties Test.

 

The new regulations become effective December 1, 2016.  Thus, now is the time for employers to evaluate the salaries and job duties and responsibilities of their employees in order to make any necessary adjustments to ensure compliance with the new White Collar Exemption and overtime rules.  The Employment Law Practice Group at Jones Blechman, Woltz & Kelly, P.C. is prepared to provide advice and guidance to employers with respect to the implementation of these new final rules.

 

facebooktwitterfacebooktwitter
  • Posted in Employment Counseling
  • Comments Off on THE DEPARTMENT OF LABOR ISSUES THE FINAL RULE ON OVERTIME AND THE WHITE COLLAR EXEMPTION

Comments are closed.