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‘White Collar’ Overtime Exemptions

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Changes to FLSA Regulations on the Horizon

Two years ago, President Obama signed an executive memorandum directing the U.S. Secretary of Labor to “modernize and streamline” the Department of Labor’s (DOL) “white collar” overtime exemption regulations. Since that time, and after promulgation of the proposed regulations last year, employers have been waiting for final rules to be released so that they know exactly what the amendments will be. Just a few months ago, all indicators pointed to a late 2016 release of the final rules, but now DOL officials said they would likely be published in the summer, which could mean a fall 2016 effective date.

While it may be difficult to identify changes that will be required to meet amendments that have not been finalized, with all of the attention that the proposed regulations have received over the past year, employers know enough to start thinking about what may need to be done in order to comply.

Employers should identify those exempt employees who do not meet the proposed minimum salary threshold of $51,000 per year (the final minimum salary threshold will most likely be less than this) and determine how many hours those employees normally work. This will allow employers to determine whether it would be better to increase their salaries to the new minimum salary threshold in order to keep them exempt, or to reclassify them as non-exempt. When deciding this point, it is also important for employers to remember that the proposed regulations have the salary threshold tied to an automatic escalator to keep pace with inflation.

While the DOL’s proposed rules do not actually change much in the current regulations, other than the minimum salary threshold, employers should also be prepared for potential changes to job duties tests for executive, administrative and professional employees. The DOL did not propose any changes to the current duties tests; however, the DOL did request public comment on whether the duties test should be modified. The result of public comment could potentially impact the final rules.

In the interim, employers are encouraged to take a look at their workforce and begin planning for changes now before the rules take effect.

tammy-lamaryTammy Lamary-Toman is the employment law counsel for the Manufacturer & Business Association. For more information, contact her at 814/833-3200, 800/815-2660 or tlamary@mbausa.org.