REMINDER OF THE PROPOSED CHANGE IN SALARY BASIS TEST
The $455/wk. salary basis for overtime exemption under current regulations was considered too low to justify exempting so many so‐called “white collar” workers. This wage amounts to only $23,600.00 per year. Failure to update the minimum salary requirement leads to an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees, who earn little more than the wages for a poverty-level family of four wages.
PROPOSED NEW SALARY BASIS
- Sets the minimum salary level at $921 per week, or $47,892 annually as the baseline for these exemptions;
- Increases the total annual compensation to qualify for the highly compensated employee exemption to $122,148 a year;
- Provides for automatic updates in the future to the baseline compensation for these exemptions.
WHAT SHOULD EMPLOYERS BE DOING NOW?
These anticipated changes are likely to have a significant impact on employers across all industries, particularly those employers with a lot of front‐line managers and assistant managers classified as exempt and those employers that use the professional and administrative exemption for many of their entry‐level positions. The employers will either have to raise salaries to preserve the exemptions or begin paying overtime to those who don't meet the new salary tests. Wise employers will begin analyzing how to deal with the new salary basis well in advance of the new projected implementation date.