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Department of Labor Proposes Massive Change to FLSA Compensation Exemptions


On June 30, 2015, the Department of Labor proposed changes in regulations for exemptions under the Fair Labor Standards Act’s executive, administrative, professional, outside-sales, and derivative wage exemptions with regard to overtime pay protections. These provisions are not yet in effect because the rules must first go through a public comment period and could include some modifications before becoming final. They do signal an impending shift that could significantly impact many employers. The new proposed rules increase the minimum salary threshold over 200%, (to about $970 per week in 2016), which annualizes to about $50,440 per year. The highly compensated exemption (which allows employees who are paid at least $100,000 annually to be treated as exempt as long as they customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative or professional employee) has been proposed to move from $100,000 to $122,148. The below links to the Department of Labor’s "Fact Sheet" and "FAQ" outline the proposed changes that are being considered for implementation, possibly by year’s end.

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