The Department of Labor recently released a proposal to revise current overtime pay regulations.
The proposed rule, issued by the DOL on July 6, will make three changes to the current regulations:
- Increase the salary minimum amount specified in the salary level test from $26,660 per year to $47,892 per year.
- Increase the salary amount for the definition of highly compensated employee (HCE) from $100,000 to $122,148 per year.
- Implement an automatic increase every year for the aforementioned salaries to adjust for inflation.
The current regulations under the Fair Labor Standards Act (FLSA) guarantees a minimum wage and overtime pay to employees with certain exceptions.
One exception to the overtime pay is the Executive, Administrative, Professional (EAP) exception; otherwise known as the "white collar" exception. Currently, under the EAP exception, employers are not required to pay overtime to employees who meet the following three qualifications:
- The employee is paid a predetermined or fixed salary (salary basis test).
- The salary amount the employee is paid is more than a minimum amount specified (currently $26,660 per year) (salary level test).
- The employee's job duties are primarily executive, administrative, or professional (duties test).
The Department of Labor is not proposing changes to the duties test, but it is accepting comments on whether the test is working to screen out employees who do not fit the EAP exception.
A copy of frequently asked questions is available on the DOL website.
Comments on the proposed rule are due September 4. Contact Kyle Liske, Director of Public Policy and Counsel (firstname.lastname@example.org), if this proposal will adversely impact your business, if you agree with the changes or have any questions.