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July 13, 2015

DOL Releases Long Awaited FLSA Proposed Changes

Filed under: General HR Buzz9:00 am

Overtime

by Emily Sternberg, HR Consultant

 

On Tuesday June 30th, 2015, the DOL released its long anticipated changes to the Fair Labor Standards Act. If enacted, the new law proposes to raise the current exempt status salary threshold from the current $455 per week to $970 per week ($50,440 annually). It is estimated that this change will impact nearly 5 million white collar workers, making them eligible for overtime compensation for hours exceeding 40 in week.

Additional proposed changes include increasing the salary level for an employee to be considered highly compensated to the 90th percentile of weekly earnings, bringing the level to $122,148 annually. Most interesting in the proposal is to add a mechanism to ensure that the salary and compensation levels going forward will continue to provide a useful and effective test for measuring exemption status. This will allow for the minimum salary threshold to be updated in line with changes in averages salaries for white collar employees nationally.

What does this mean for employers?

Employers should begin to evaluate which exempt employees will be impacted by this proposed change and begin to create strategies for implementing and communicating the change to staff. This does not mean that all salary employees must be paid on an hourly basis, however it does mean that salaried employee must be paid at one-and-a-half times their base rate for any hours worked over 40 in a single week.

This proposed regulation will not take effect immediately, and the DOL is seeking comment on the proposed regulation. Employers will be notified of when the change is in effect and will most likely be given a reasonable window in which to implement the new regulation.

 

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