The U.S. Department of Labor is proposing to update the regulations governing which executive, administrative, and professional employees (“white collar workers”) are exempt from the federal Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay protections.
Key updates of the proposed rule include:
- Raising the salary threshold from $455 a week ($23,660 a year) to a projected level of $970 per week ($50,440 annually) in 2016 (the 40th percentile of weekly earnings for full-time salaried workers) to qualify for an exemption.
- Increasing the total annual compensation requirement needed to exempt highly compensated employees to $122,148 annually (the annualized value of the 90th percentile of weekly earnings of full-time salaried workers).
- Establishing a mechanism for automatically updating the salary and compensation levels going forward. Two alternatives are being considered—one method would update the thresholds based on a fixed percentile of earnings for full-time salaried workers, and the other method would update the thresholds based on changes in the Consumer Price Index for All Urban Consumers (CPI-U).
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Our Section on the Fair Labor Standards Act features additional information on exemptions from the law’s minimum wage and overtime requirements.