Update on DOL changes to FLSA White Collar Exemptions

By Alexandra D. Thaler

As we previously reported here, the Department of Labor will soon be revising the so-called “white collar exemptions” to the Fair Labor Standards Act (FLSA).  Recently, the DOL has indicated that it now plans to issue the Final Rule in July 2016.

To recap, on June 30, 2015, the DOL issued a detailed report and proposed rule, inviting the public to submit comments through September 4, 2015.  The agency has received nearly 300,000 comments to date, underscoring the intense interest the proposed changes have garnered across diverse stakeholder groups.

The text of the proposed rule focused exclusively on increasing the minimum weekly salary threshold for application of the Executive, Administrative, Professional, and Computer Employee overtime exemptions, raising the rates from the current $455 per week, or $23,660 annually, to an estimated $970 per week, or $50,440 annually.  The proposed rule also included an increase to the minimum compensation required to qualify for the Highly Compensated Employee exemption, from $100,000 to $122,148 initially, with yearly increases tied to annual data on national wages for full-time salaried employees.  The report that accompanied the proposed rule also noted that the DOL was considering whether changes to the “duties” portion of the exemption tests would also be implemented, but did not propose any specific rule language on the subject.

Previously, the Solicitor of Labor Patricia Smith had indicated that the Final Rule would not issue until “late 2016,” suggesting that the rule would become effective in 2017.  If the DOL in fact meets the revised timeframe, employers may need to implement changes as early as August 2016.  In addition, Ms. Smith also referenced the possibility that the final rules may include changes to the duties test and other aspects of the white collar exemptions.  Accordingly, employers are advised to begin planning now for the anticipated changes to the exemptions by reviewing employee classifications and salary levels and duties of those classified as exempt, in order to be prepared to take prompt action to bring their exemption-related practices into compliance once the Final Rules are issued.