DOL Proposes Wholesale Changes to Overtime Rules Salary Requirements

September 10, 2015

After years of anticipation, the U.S. Department of Labor (DOL) released its Notice of Proposed Rule Making on June 30, 2015, revising the overtime exemptions under the Fair Labor Standards Act (FLSA) by targeting salary requirements.

The FLSA requires a covered employer to pay overtime to its employees for all hours worked over 40 in a workweek, unless that employee meets the salary and duties requirements of one or more of the overtime exemptions. At present, an exempt employee must be paid a salary of no less than $455 per week (or $23,660 annually), or, if treated as a highly compensated exempt employee, no less than $100,000 annually.

The proposed regulations would increase the salary requirement for most exempt employees to the 40th percentile of earnings for full-time salaried workers, or around $970 weekly (or $50,440 annually). The minimum compensation level for the exempt highly compensated employee would be increased to the 90th percentile of weekly wages of all full-time salaried employees, or around $122,148 per year. These salary and compensation levels would also update annually.

Although not making specific proposals to modify the standard duties requirements for exempt employees, the DOL is seeking comments on whether the current duties tests are working as intended to screen out employees who are not bona fide executive, administrative, or professional employees.

Contributed by Scott Eldridge, Principal with Miller Canfield.