Legal Blog

Feds Propose Update to Double Minimum Salary Requirements for White Collar Workers

salaryOn June 30, 2015, the Wage and Hour Division of the federal Department of Labor (DOL) issued proposed rules and requests for comments regarding, among other things, the minimum salaries paid to “white collar” employees.  Currently, to be exempt from overtime under the Fair Labor Standards Act, employees must meet certain minimum tests related to their primary job duties and be paid a minimum salary.  Since 2004, that minimum salary was $455 a week or $23,660 annually.  To compare, a household of 4 people earning $24,250 per year meets the 2015 poverty threshold.[i]

In March 2014, President Obama signed a Presidential Memorandum directing the DOL to modernize and simplify its white collar exemptions.  The DOL has responded with a proposal to raise the minimum weekly salary to $970 a week or $50,440 annually.  This, of course, more than doubles the minimum salary requirement if employers wish to maintain the white collar exemption for their workers.

In order to prevent the wage thresholds from once again becoming outdated as time passes between rulemakings, the DOL also proposes annual automatic updates to these thresholds, either by maintaining the levels at a fixed percentile of earnings or by updating the amounts based on changes in the Consumer Price Index.

The next step in this process is publication of the proposed rule in the Federal Register, followed by a 60-day comment period.  Following review of the comments submitted, the DOL will publish a “final rule” that could differ from the initial proposed language.  The effective date for the amended regulations will most likely be sometime in 2016.

Stay tuned as Offit Kurman follows this proposed rule and provides periodic updates to prepare you for required workplace changes.

[1]  Data from the Department of Health and Human Services.

 

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