June 25, 2015
The long-awaited regulations updating who is eligible for overtime pay are scheduled for release shortly. This revised Department of Labor (DOL) proposed rule on exempt employee overtime pay under the Fair Labor Standards Act (FLSA) is designed to make overtime compensation available to more employees. It is currently with the Office of Management and Budget’s Office of Information and Regulatory Affairs, its last stop prior to publication.
The new regulations are expected to significantly raise the minimum salary threshold for overtime exemption. Employees are currently exempt, subject to other tests, if they earn at least $23,600 annually. Although the DOL has not discussed the new amounts, it is widely anticipated that they will rise to approximately $50,000 annually. Moreover, the new amounts may be indexed to inflation. This change would increase the number of non-exempt employees, which could raise payroll costs.
The DOL’s new regulations are also expected to modify the primary duty standard, which determines whether employees qualify for a white-collar exemption. Employees who spend at least 50 percent of their work hours performing executive, administrative or professional duties would qualify for the exemption. This change would likely increase the number of employees eligible for overtime payments and increase employers’ timekeeping and recordkeeping responsibilities.