Labor and Employment

Action Item: The U.S. Department of Labor (“DOL”) has announced its much-anticipated proposed regulations regarding “white collar” exemptions to the Fair Labor Standards Act (“FLSA”), which, if implemented, would substantially raise the minimum salary threshold and impact millions of workers.

As we detailed in a previous alert, in March 2014, President Obama directed the secretary of labor to propose revisions to “modernize and streamline” the white collar exemptions to the FLSA’s minimum wage and overtime pay requirements.  The current regulations exempt salaried employees who are paid a minimum of $455 per week ($23,660 per year) and who qualify as executive, professional, outside sales, and/or computer employees.

On June 30, 2015, the DOL released a Notice of Proposed Rulemaking (“NPRM”) in response to President Obama’s directive.  If implemented, the proposed rule would more than double the salary amount necessary to qualify for the FLSA’s white collar exemptions, increasing the threshold to $970 per week ($50,440 per year).  Further, this increased salary requirement would impact approximately five million workers nationwide.  The NPRM also proposes that the salary basis automatically adjust in the future to keep pace with inflation or by remaining tied to the 40th percentile of weekly earnings of salaried employees that was used to calculate the new threshold.  While the NPRM does not propose changes to the job duties tests for the white collar exemptions, the DOL has solicited comments to determine whether these tests are working as intended or if updates are necessary.

The proposed rule is expected to be published in the Federal Register in the next few days.  Once published, the proposed rule will be subject to a 60-day comment period, after which the DOL will review the comments and issue a final rule.

We will continue to monitor and update you on the proposed regulations.