On Tuesday, June 30, 2015, in an attempt to “modernize and streamline” the regulations on exemptions from the Fair Labor Standards Act’s (“FLSA”) minimum wage and overtime pay requirements, the U.S. Department of Labor issued a Notice of Proposed Rulemaking (“NPRM)” which focuses primarily on increasing federal overtime pay regulatory coverage to nearly 5 million people by raising the minimum salary threshold required to qualify for the FLSA’s “white collar” exemption. Specifically, the Department proposes to:
- Set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($970 a week; or $50,440 a year) in 2016;
- Increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
- Establish a mechanism for automatically updating the salary and compensation levels going forward so as to ensure a useful and effective test for exemption.
The Department’s regulations have generally required each of the following three tests to be met for the white collar exemptions to apply: 1) the employee must be paid a predetermined, fixed salary that is not subject to Continue reading