DOL Puts Out New Proposed Overtime Exemption Rules For Comment
First Proposed Revision - Salary Basis Test: One issue raised is that the $455/wk. salary is too low to justify exempting many workers from receiving overtime for many so-called white collar workers. This wage amounts to $23,600.00 per year. This baseline figure has not been updated since 2004. This failure to update the overtime regulations 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.
- Set the standard salary level at $921 per week, or $47,892 annually as the baseline for these exemptions;
- Increase the total annual compensation to qualify for the highly compensated employee exemption to $122,148 a year;
- Provide for automatic updates in the future to the baseline compensation for these exemptions.
- Redefine the current duties test to go back to old standards based on the percentage of time the employee spends in "exempt" activities.
WHAT IS THE LIKELY IMPACT OF THESE CHANGES?
All of these anticipated changes are likely to have a significant impact on employers across all industries, particularly those employers with a lot of frontline 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.
WHEN WOULD THESE NEW RULES GO INTO EFFECT?
The proposed effective date if these new regulations are adopted is January 1, 2016. Whether this happens or not depends on what comments come in before September 4, 2015. To learn more about how to comment go to the DOL website.
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