On June 30, 2015, the Department of Labor issued proposed new regulations under the Fair Labor Standards Act (FLSA.) The proposed regulations raise the salary level for exempt employment, from the $455 per week or $23,660 annually set in 2004, to $970 a week or $50,440 a year by 2016.

Executive, administrative, learned professionals and some computer employees (white collar exemptions), who make less than $970 a week will no longer be exempt and will be entitled to overtime for all hours they work over 40 in a given work week. Employers will have to decide either to pay these employees overtime going forward or raise their salary level to more than $970 a week in order to comply with the three part test set forth in the proposed FLSA regulations.

The three part test requires that an employee be (1) paid on a salary basis, and (2) at a salary level now of not less than $970 a week and (3) that they meet the duties test set forth for each of the white-collar exemptions. The proposed regulations would establish a mechanism for automatically updating the salary and compensation levels going forward each year to ensure that they will continue to provide a useful and effective test for exemption.

The rulemaking period offers a prolonged period for comments and revisions so employers should not expect that these revised regulations to take effect until late 2015 or early 2016. We will keep our readers advised as to any updates on these regulations. Stay tuned!

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.