Analysis of U.S. Department of Labor Proposed Rule on New Overtime Requirements
In follow-up to a directive from President Obama, the U.S. Department of Labor (DOL) issued a proposed rule that would raise the minimum compensation level to qualify for an exemption from minimum wage and overtime requirements under the Fair Labor Standards Act (FLSA), as previously reported. The FLSA permits the exemption of certain executive, administrative, and professional employees provided that the workers are paid on a salary or “fee basis” at least at the level of the prescribed minimum standard. The current minimum of $455 weekly has been in place for a number of years.
DOL proposes to raises the minimum compensation level for the exemptions to the 40th percentile of weekly earnings for full-time salaried workers. That current level would be $921 weekly or $47,892 annually. The FLSA exemptions are determined on a weekly basis. In addition, DOL proposes to raise the “highly compensated employee” standard from $100,000 annually to the annualized value of the 90th percentile of full-time salaried workers ($122,148).
These proposed levels would be automatically adjusted annually under the new rule. DOL estimates that the minimum would rise to $970 in 2016 ($50,440 annual). Certain highly compensated employees are exempt provided they customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative, or professional employee.
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