Under the current “white collar” exemptions to overtime requirements for Executive, Administrative and Professional employees, the U.S. Department of Labor has issued a Notice of Proposed Rulemaking that would amend the salary portion of the test to qualify for these exemptions; the job duty tests are not affected.
In essence, the current minimum salary, which was set back in 2004 of $455 per week or $23,660 per year, would be increased to $921 per week or $47,892 per year and projected to be $970 per week or $50,440 per year beginning in 2016. Future updates to the minimum salary would be indexed and updated annually. Based on statistics from 2013, the salary test for highly compensated employees would be increased from the current minimum of $100,000 per year to $122,148 per year.
While this is only a proposed rule change still in the comment phase, some form is likely to be adopted. Now is a good time for employers to review and plan for these changes.
Some points to consider in the planning process include:
• Reviewing currently exempt employees who may no longer meet the salary test to estimate effects on your business;
• Procedures for annual review of exempt employees against the yearly indexed minimum salary;
• Education of no longer exempt employees as to time keeping requirements;
• Changing job duties and schedules to minimize the need for overtime; and
• Adopting or clarifying policies as to pre-approval of overtime.
To learn more about the proposed rule, click here.