On December 1, 2016, the U.S. Department of Labor will implement a long-anticipated change to the so-called “white-collar” exemptions under the FLSA, increasing the minimum salary level necessary for employees to be properly classified as exempt executive, administrative, and professional employees.
The new regulations will, among other changes, increase by slightly more than double the minimum salary level for exempt “white-collar” employees from $455/week (or $23,660/year) to $913/week (or $47,476/year). In addition, the new Rule raises the highly compensated employee (“HCE”) threshold from $100,000 to $134,004.
This new rule applies to everyone. There is no exception for small businesses. Of note, the new Rule does not change the “duties tests” for executive, administrative and professional employees. The final rule also allows for up to 10 percent of the minimum salary level for non-highly compensated employees to be met by non-discretionary bonuses, incentives, or commissions – assuming these payments are made on at least a quarterly basis.
Ultimately these changes to the “white-collar” regulations will equate to higher wages to employees, higher wage costs for employers, and likely increased exposure and risk to employers in wage and hour cases.
The Department has published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on July 6, 2015 (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015.
Employers should act now by reviewing positions and associated job descriptions that may be affected by this change in Federal law. It is essential that the salaries and the actual duties of employees classified as exempt meet the Federal standards. If you are in doubt, seek counsel from experienced employment law counsel.
Michael Freeland has been practicing law for 25 years and specializes in employment law matters. Contact Freeland Law APC for a free 30-minute consultation with Michael Freeland, experienced employment lawyer serving San Diego, California.
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