As we have noted for months on this blog, the Department of Labor (DOL) has been hard at work on proposed changes to the overtime regulations. Everyone knew the minimum salary threshold for exempt status was going to be raised, but no one knew by how much. Well, the DOL apparently believes in the “go big or go home” method of rule-making and has proposed that the threshold be increased from $23,000 to approximately $50,000 next year. The measure will also be indexed to the Bureau of Labor Statistics (BLS)’s 40th percentile of full-time salaried workers, and be increased annually.
The proposed rule also plans to increase the highly compensated employee exemption from $100,000 to $122,000 and index this threshold to the 90th BLS percentile of full-time salaried workers. The hidden gem in the proposed rule is the request for comment on changes to the duties tests for the white collar exemptions. Among other things, the DOL is looking at putting limits on the percent of time that an exempt worker can perform non-exempt work. This is already the case under California state law, and the DOL specifically invites comments on whether the California standard should be adopted nationwide. Suffice it to say, adopting a California rule is almost never going to make it simpler for employers, or reduce the risk of litigation.
Our firm’s client alert on the development can be found here.