By Anne-Marie L. Storey, Esq.
The US DOL has issued new regulations which propose significant changes to the FLSA. As you are aware, in order to be exempt from overtime compensation an employee must meet both the duties and salary basis portion of the test. The proposed regulations would revise the salary basis portion of the test and do not propose any specific changes to the duties portion of the test, although the proposed regulations do at least mention the duties test and seek comment on various issues related to that test.
Under the current regulations, the salary basis minimum is $455 per week ($23,660/year). The proposed revisions would increase that amount to $970 per week ($50,440/year) starting in 2016. This represents the 40th percentile of weekly earnings for all full-time salaried employees. It would also include periodic automatic increases. In addition, the proposed revisions would revise the highly compensated employee salary threshold from $100,000 to $122,148 per year. It is estimated (in a statement issued by President Obama) that these increases would result in excess of five million additional employees being eligible for overtime compensation.
The timeframe for comment on the proposed regulations has not yet been set. The DOL’s website should provide updated information about the date and process for comment. Until the proposed regulations are accepted (assuming they are), employers should continue to follow the current rule.