WASHINGTON D.C. — The U.S. Department of Labor has officially sent its highly anticipated final overtime rule to expand overtime protection to the White House’s Office of Management and Budget for final review.
The final rule wasn’t expected until July.
If approved by the White House, the federal department can publish a final rule. The DOL previously issued a proposed rule to expand access to overtime wages by more than doubling the threshold under which salaried employees are eligible for overtime compensation. After a final regulation is published, the Congressional Review Act gives Congress 60 legislative days to review it and act on a disapproval motion.
Potential Changes to the Salary and Compensation Thresholds for White-Collar Exemptions
Under the current regulations implementing FLSA, the salary threshold for the so-called “white collar” exemption is $455 per week, or $23,660 per year. Additionally, current rules provide an exemption for “highly compensated employees” if they are paid a total annual compensation of at least $100,000, which includes at least $455 per week paid on a salary or fee basis, and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative or professional employee. However, the proposed rules issued by DOL would:
- Set the salary level at $921 per week, or $47,892 annually. This level is the 40th percentile of weekly earnings for full-time salaried workers. DOL believes this is the most appropriate line of separation between exempt and nonexempt employees. According to DOL, this salary level minimizes the risk that employees will be misclassified based solely on salaries received, without excluding from exemption a high number of employees who meet the duties test.
- Increase the total annual compensation requirement needed to exempt highly compensated employees to $122,148 annually.
- Establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.
Automatic Updates to Salary and Compensation Levels
DOL proposed two different method for ensuring that the salary and compensation levels remain useful and effective for the exemption. The first method would be to keep those levels pegged to the 40th and 90th percentiles of earnings for full-time salaried workers, respectively. The second method would be to adjust salary and compensation amounts based on changes in inflation, as measured by the Consumer Price Index for all Urban Customers.
Until a final rule is published, the current rules for the white-collar exemption under FLSA are still in effect with the current salary thresholds. If you or someone you know is not being paid overtime as required by FLSA regulations, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our top rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.