News & Events

DOL Announces Significant Proposed Changes To Overtime Rules

As we’ve been advising, the Department of Labor’s (DOL) proposed changes to the overtime regulations under the Fair Labor Standards Act have finally been released for public comment. The final rules are not expected to be announced until 2016.

The Notice of Proposed Rulemaking (NPRM) is focused on increasing the salary required for white collar workers to be exempt. The NPRM sets the standard salary level at the 40thpercentile of weekly earnings for full-time salaried workers, which for 2016 is projected to be $970/week or $50,440/annually. In addition, an increase of the standard for Highly Compensated Employees has been proposed to be equal to the 90th percentile of earnings for full-time salaried workers ($122,148/annually). Notably the NPRM provides that the DOL will automatically updatethe salary level on an annual basis. The NPRM does not contain proposed changes to the duties test as anticipated; instead, the DOL is seeking employer comment and examples in specific occupations. The DOL is also interested in feedback from employers regarding the possibility of including nondiscretionary bonuses to satisfy a portion of the standard salary requirement.

As the proposed regulations are only in the public comment period, employers are not required to make any changes at this time. Changes to the proposed regulations may be made and it is not anticipated that the final regulations will be effective until sometime in early 2016. However, now is a good time for employers to review job classifications to determine which roles may be impacted and to begin the process of establishing a method to track time for previously exempt employees who will need to be re-classified as a result of these changes, and for budgeting for those changes accordingly.

If you have any questions regarding the Department of Labor’s proposed changes, please contact Jeffrey M. EmbletonAmy L. KullikJames A. Budzik or Ann E. Knuth in our Labor and Employment Group at Mansour Gavin LPA at (216) 523-1500.

 

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