Minimum Salary Basis Increased to $47,892 (Annual Salary)
Highlighted in our blog post from April of this year (here), President Obama recently issued a memorandum to the U.S. Secretary of Labor directing the Secretary to modernize and streamline the existing overtime regulations for executive, administrative, and professional employees. The regulations, codified at 29 C.F.R. Part 541, provide the rules for the so-called “white collar” exemptions to overtime pay requirements, as well as the rules for classifying outside salespersons and computer employees.
On June 30th, the controversial rule was released and included the U.S. Department of Labor's (USDOL) proposal to raise the minimum salary for exempt status under the white collar overtime exemptions from $455 per week (or $23,660 per year) to $921 per week (or $47,892 per year). The increase in minimum salary for exempt status was less than many anticipated, including President Obama, who was promising a $50,400 minimum salary for exempt workers as of June 29th. However, as stated, he proposed rule would extend overtime protections to nearly 5 million white collar workers within its first year of implementation.
In addition, the USDOL proposes to raise the minimal level of total annual compensation for “highly compensated employees”—who are deemed exempt under federal law if they “customarily and regularly” perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee (even if such duty is not their “primary duty”)—from $100,000 to $122,148.
There were no proposed changes to the duties tests for exempt status, despite the anticipation that the USDOL would move from the more qualitative “primary duty” test to a quantitative, percentage-of-time-spent test.
Rulemaking and Public Comment Period
According to the USDOL's website, the proposed regulation is a critical first step toward ensuring that hard-working Americans are compensated fairly and have a chance to get ahead. However, although the Office of Management and Budget (OMB) has reviewed and approved the Notice of Proposed Rulemaking (NPRM), the document has not yet been published in the Federal Register. The NPRM that appears in the Federal Register will specify the dates of the public comment period and may contain minor formatting differences in accordance with Office of the Federal Register publication requirements. The OMB-approved version is being provided as a convenience to the public and this website will be updated with the Federal Register's published version when it becomes available.
Upon publication of the proposed rule, interested parties will be invited to submit written comments on the proposed rule at www.regulations.gov. Only comments received during the comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.
Have Questions about White Collar Overtime Exemptions?
Should you have questions about the USDOL's proposed rule, don't hesitate to contact leading California employment lawyers at Kingsley & Kingsley. Call and speak to an experienced California lawyer toll-free at (888) 500-8469 or click here to contact us via email.