The Fair Labor Standards Act (FLSA or Act) guarantees a minimum wage and overtime pay at a rate of not less than one and one-half times the employee’s regular rate for hours worked over 40 in a workweek. While these protections extend to most workers, the FLSA does provide a number of exemptions. The Department of Labor proposes to update and revise the regulations issued under the FLSA implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. This exemption is referred to as the FLSA’s “EAP” or “white collar” exemption. To be considered exempt, employees must meet certain minimum tests related to their primary job duties and be paid on a salary basis at not less than a specified minimum amount. The standard salary level required for exemption is currently $455 a week ($23,660 for a full-year worker) and was last updated in 2004.
The DOL has just proposed new regulations that would revise the “white collar’ exemption rules. In particular, the DOL recommends setting the minimum salary level for the administrative, executive and professional exemptions at the 40th percentile of weekly earnings for full-time employees or $921 per week or $47,892 annually. The DOL estimates that by the time the final rule is issued in 2016, this amount will increase to $970 per week or $50,440 per year. In addition, the DOL proposes raising the compensation requirement needed to qualify for the highly compensated employee exemption to equal the 90th percentile of weekly earnings, or $122,148 annually. The proposed regulations may be viewed here.