Be Prepared - Delay In New DOL Exemption Rules For White-Collar Employees Will Shorten Employer's Compliance Time

Volume 14, Issue 26
November 30, 2015

In June of this year, the U.S. Department of Labor ("DOL") announced a proposal to update its regulations governing the minimum wage and overtime exemptions to the Fair Labor Standards Act for executive, administrative and professional employees ("white collar" employees). These are the rules that govern whether an employer can avoid paying overtime to salaried employees such as managers. We reported in Volume 14, Issue 13 of the KZA Employer Report that the DOL's proposed changes were significant. For example, one proposed change would raise the minimum salary an employer must pay to qualify for the overtime exemption from $455 per week (or $23,660 per year) to $970 per week (or $50,440 per year). This change alone will clearly have a big impact on all compensation practices.

The DOL has now indicated that the new regulations are delayed and will not likely be issued until "late 2016." Legal commentators are suggesting that this will likely mean employers will have only 30 to 60 days to comply with the new rules once they are issued. It is important, therefore, not to wait to consider what changes your company may need to make under the proposed regulations. While the exact changes to the regulations are not yet known, it is safe to assume that the minimum salary requirement for the white-collar employee exemption will be increased.

We will continue to keep you updated on this matter and are available to assist you as you review the status of your salaried employees.

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.