July 2016 Timeline for Final Rule on White Collar Exemptions
As many employers are aware, the Department of Labor (DOL) has proposed a rule change to the white collar exemptions for minimum wage and overtime requirements. The proposed rule updated the minimum compensation and salary levels to qualify for the white collar exemption from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements. In fact, the update would more than double the minimum salary exemption to $50,440 per year from $23,660. The rule also provided for an increase in the minimum annual compensation required to qualify for the highly compensated employee exemption to $122,148 per year. Finally, the rule includes a provision to adjust the salary requirement for inflation to ensure the continued effectiveness for purposes of exempting employees.
Many employers were aware that the Proposed Rule was subject to a comment period; however, after the comment period closed, the central concern for employers had become when the Proposed Rule would become final. Until recently, the DOL had not provided any information on this issue. The Office of Management and Budget Office of Information and Regulatory Affairs published its Fall 2015 regulatory agenda and provided some clarification. A final rule is to be published in April 2016. Since the a new rule for these white collar exemptions will be finalized soon and potentially without substantial notice to implement changes what should you, as an employer, do now to prepare for this proposed rule change?
1) Audit your workforce – How many employees are likely to be impacted by the change?
2) Develop a strategy for how you are going to address employees that are no longer exempt – What is the most economical way to address the changes? Design a strategy that can be easily modified to address changes when the final rules are published.
3) Evaluate your handbook – Do the changes to the exemptions require you to change any of your existing employee policies? Do you need new or additional policies to address these changes? How are you as the employer going to effectively communicate any needed changes to the employees?
4) Maximize the benefits of the changing law – Do you have employees that are not currently compliant with the exemption? Utilize the new rule to make effective changes to ensure compliance and minimize the exposure for wage and hour litigation.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.