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Mar 2019
11
March 11, 2019

U.S. Department of Labor Releases Proposed New White Collar Exemption Rule

On March 7, 2019, the U.S. Department of Labor (DOL) released a proposed rule revising the white collar exemption to the Fair Labor Standards Act’s minimum wage and overtime requirements. Read the proposed rule here.

At present, employees paid at least $455 per week ($23,660 annually) and who perform duties meeting certain requirements are not eligible for overtime pay. The current salary level was set in 2004. In 2016, the DOL proposed to increase the salary level to $913 per week (or $47,476 per year). That rule was challenged and eventually blocked by a federal court.

Under the DOL’s proposed rule, the salary level would increase to $679 per week (equivalent to $35,308 per year). Employers would be permitted to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the proposed standard salary level.

The proposal also increases the total annual compensation requirement for “highly compensated employees” (HCE) from the current level of $100,000 to $147,414 per year.

There is no proposal to modify the job duties tests, nor is there any proposal for automatic updates to the salary threshold.

The public will have 60 days to comment on the proposed regulation. After that, the DOL will review any comments submitted before issuing a final rule. The timing of a final rule is not known. It is likely the DOL will issue a final rule well before the November 2020 election.

If you have any questions about the proposed rule or wage/hour compliance in general, please contact anyone in the Warner Norcross + Judd Labor and Employment Practice Group.

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