As Lobbying Continues Over FLSA's White-Collar Employee Regulations, Employers Can Take Steps to Prepare

Volume 14, Issue 3
March 3, 2015

As reported in KZA's January 29, 2015 Employer Report, there is growing pressure on the U.S. Department of Labor (DOL) to significantly increase the minimum salary threshold for executive, administrative, and professional employees exempt from the overtime premium pay requirements of the Fair Labor Standards Act (FLSA) when it releases proposed regulation revisions that are expected later this month.

Recently, a group of 26 Democratic Senators sent a letter to President Obama requesting that the DOL increase the minimum salary threshold to at least $56,680 per year. In addition, Representative Mark Takano (D-CA) sent a letter signed by 31 House Democrats to both President Obama and Secretary Perez in which he endorsed political activist Nick Hanauera's November 2014 essay in POLITICO Magazine, which argued for an increase of the FLSA's minimum salary threshold for exempt "white collar" employees to at least $69,000.

Whether the Obama Administration settles on $42,000, $56,680, or $69,000, the increase will be substantial and have a wide-ranging impact on businesses, particularly those in the service and retail sectors. While employers wait for the imminent issuance of the proposed FLSA regulation revisions, they can take some steps to prepare.

Working with employment counsel, employers can undertake a privileged review of their salary exempt job positions to identify those that currently barely meet, or are in a "gray zone" of meeting, the duties or salary basis test components of the FLSA white-collar employee exemptions. Such job positions may likely include those with salary levels toward the lower end of the exempt spectrum, as well as job positions involving a large amount of (arguably) non-exempt tasks. If either the duties or salary basis test components are narrowed by the DOL's regulatory changes, it stands to reason employees in these barely qualifying or "gray zone" positions will be the most impacted. Once such job positions are identified, employers can begin to develop contingency plans, including possible approaches to creating work schedules and pay rates for employees that need to be converted from exempt to non-exempt status.

At a minimum, employers should make sure their current job descriptions for exempt-designated positions are up to date and accurately describe the duties and core functions of such positions in a manner that makes it clear to a reader unfamiliar with their business activities why the jobs are exempt. Using straightforward language free of industry-speak and technical terminology is key.

If you have any questions or would like further information about this legal development, please do not hesitate to call the KZA attorney with whom you regularly work or call our office at (702) 259-8640.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.