Department of Labor Issues Proposed Rules Decreasing the Number of Exempt Employees Under FLSA

Anne W. Chapman - Blalock Walters Attorney

Anne W. Chapman, Labor & Employment

The U.S. Department of Labor (DOL) issued a Notice of Proposed Rule Making (NPRM) on June 30, 2015 that clearly demonstrates the Department’s intention to decrease the number of employees that qualify as exempt under the Fair Labor Standards Act (FLSA). Specifically, the NPRM outlined proposed changes to regulations related to the so-call white collar exemptions (executive, administrative, professional and highly-compensated employee exemptions) from the overtime requirements of the FLSA.

Weekly Salary Level: Currently, an employer must pay a weekly salary of a minimum of $455 ($23,660 annually) in order for an employee to qualify for an overtime exemption on the basis of the executive, administrative or professional exemptions. The NPRM proposes to double this salary requirement to $970 ($50,440). The DOL estimates that this change, if implemented, would result in over four million employees no longer being classified as exempt from overtime.

Automatic Increases: In addition, the NPRM proposes that the minimum weekly salary is automatically increased each year based on data from the Bureau of Labor Statistics. The precise method for calculating the increase has not been determined. However, this change is notable as it is the first time since the passage of the FLSA in 1938 that there would be automatic increases in the minimum salary requirement.

Highly-Compensated Employee: The proposed regulations would also change the salary requirement for the highly-compensated employee exemption. The DOL proposes increasing this requirement to an annual salary of $122,148 from the current level of $100,000. As with the proposed revisions to the salary level for other white collar exemptions, the NPRM includes a provision to increase this salary requirement on an annual basis.

Duties Test: Surprising to some, the NPRM did not include any revisions to the duties test portion of the white collar exemptions. However, it did solicit comments from the public concerning possible revisions to the duties test. Therefore, it remains to be seen if the DOL will consider issuing additional proposed amendments in the future.

The Department of Labor has invited any interested parties to submit written comments on the proposed regulations at www.regulations.gov. Any comments must be received on or before September 4, 2015. The DOL is not expected to issue final rules until sometime in 2016.

For more information or questions, please contact Labor & Employment attorney, Anne W. Chapman at 941.748.0100 or achapman@blalockwalters.com.