Will Employers Be Surprised in July?
By Ruder Ware Alumni
February 5, 2016
Recent statements from the Department of Labor Solicitor Patricia Smith have suggested that the new regulations being considered by the Department of Labor on the white collar exemptions from overtime will be published in July and become effective in September. This is an earlier date than was originally hinted at by Solicitor Smith in prior statements. While the effective date of proposed new regulations on FLSA exemptions is unclear, the content of the regulations are well known and publicized.
Effective sometime this year (likely September), the overtime exemptions for administrative employees and professional employees will be modified to require that an employee receive a salary of $970 per week instead of the current $455 per week. This means that a number of mid-level employees may now be subject to overtime pay requirements if they do not meet this salary level. There has been talk about changing the “primary duties” test which is part of the exemption requirements but to date, nothing has been published or announced about the primary duties requirement.
Employers need to be looking closely at this issue. Employers need to decide whether those currently overtime exempt employees whose salary is below $52,000 a year will now begin to receive time and one-half pay for hours worked over 40 hours per week or will have their salary adjusted to the higher level. Employers also need to have a clear understanding of the work being performed by these mid-level employees to make the determination on how best to proceed. Employers must not forget the definition of “time worked” and remember that working during non-office hours (i.e. communicating by e-mail after work) must be counted as time worked for purposes of the 40 hour per week limitation and the requirement for overtime pay.
This change in the annual salary required for exempt status may be more critical than employers think. This is especially true if the employer expects these mid-level employees to be available at any time to respond to questions or address work-related issues. Employers must be prepared to properly address this issue and avoid overtime liability.
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