Department of Labor Proposes New Overtime Rules

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The United States Department of Labor ("DOL") recently proposed rules to amend the Fair Labor Standards Act ("FLSA") in order to create new parameters for determining which employees are eligible for overtime pay.  If implemented, these rules would significantly expand the number of employees who are entitled to receive overtime pay, including employees that presently are not eligible to earn overtime pay as a result of being classified as exempt.

Currently, salaried employees must earn $455 per week (or $23,660 per year) in order to meet one of the requirements for being exempt from earning overtime pay.  Under the proposed rules, however, that threshold would increase to $970 per week (or $50,440 per year), which would reduce the number of employees that fall within the exemptions.  The DOL proposes increasing this threshold amount annually, either by tracking the consumer price index ("CPI") or by staying aligned with a fixed percentile of wages.

Additionally, under the current rules, in order to be considered a "highly-compensated employee" and thus exempt from overtime pay under that exemption category, a worker must earn a salary of $100,000 or more per year.  The proposed rules, if enacted, would increase that required salary to $122,148 per year.  This threshold amount would similarly increase annually and would expand the number of employees eligible to earn overtime pay.

The DOL also is re-analyzing the list of job duties required to be performed by an employee in order to fall within the various exemptions.  It is also considering changing the list of examples of occupations that typically fall within those exemption categories.  Like the other changes, these proposed modifications are designed to increase the number of employees eligible to earn overtime pay.

The DOL is aiming for these rules to go into effect in 2016, and it estimates that an additional 4.6 million people would become entitled to overtime pay if the proposed rules are adopted.  Accordingly, employers should be proactive and begin analyzing their personnel policies and their employees' salaries, duties, and hours worked per week to determine whether any of their employees might be converted from exempt to non-exempt status.  For assistance with conducting an analysis of an employee's exemption status, please feel free to contact Connell Foley's labor and employment law attorneys.