Member Article

On Tuesday, the U.S. Department of Labor (“DOL”) unveiled its highly anticipated proposed changes to the overtime pay regulations of the Fair Labor Standards Act (“FLSA”). These proposed changes are predicted to broaden coverage to nearly fivemillion additional workers. The proposal would more than double (to over $50,000 per year) the salary an employee must be paid to qualify for the “white collar” exemptions and increase the salary threshold for highly compensated employees to over $122,000 per year. The DOL passed on an opportunity to detail any revisions to the complex “duties test” for applying the white collar exemptions, opting instead to invite further comment from stakeholders as to whether any modifications to the test are needed.

The FLSA provides a number of exemptions from the Act’s minimum wage and overtime pay provisions, including exemptions for bona fide executive, administrative and professional employees. To qualify for one of these white collar exemptions, the employee must be paid a predetermined minimum salary and the employee’s job must primarily involve executive, administrative or professional duties. Under current regulations, an employee must be paid at least $455 per week ($23,660 per year) to meet the standard exemption. This figure has not been updated since 2004, and is now slightly below the 2014 poverty threshold for a family of four. In order to meet the corresponding exemption for highly compensated employees, such an employee must earn at least $100,000 in total annual compensation and meet a less onerous duties test.

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