Labor & Employment Law Blog

The DOL issues regulations that define the scope of the white collar exemption.  This new regulation increases the threshold amount by more than $11,000 and will enable more workers to earn overtime pay.  The new regulation is a significant raise from the current salary threshold amount of $23,660, which has been the existing rule since the Bush Administration in 2004.  In 2016, during the Obama Administration, the DOL issued a rule that would have raised the salary threshold to approximately $47,000.  A rule that would have increased approximately four million workers’ overtime eligibility, an increase many business groups argued was too high.  Days before the 2016 rule was set to take effect, a federal judge in Texas blocked the rule, which has been enjoined ever since.  The DOL’s new overtime regulation attempts to split the middle.  The increase will cause approximately a million more workers throughout the United States, who earn less than the salary threshold, to be eligible for overtime compensation.   

 Impact on Employers

The new overtime regulation will affect numerous industries and is subject to the public comment period, which allows the public to submit comments to the DOL for review within 60 days.  The DOL can then publish a finalized version of the regulation.  The DOL’s goal is to have the regulation finalized before the next election.  Once the rule is finalized and takes effect, employers should prepare for an increase in the salary basis to $35,308 to qualify for the white collar exemption under the federal test. 

 Employers in California must comply with both State and federal requirements.  Currently, California employers with 26 or more employees must pay a salary of at least $49,920 annually to exempt employees as well as ensure the employee satisfies the duties test to qualify for the white collar exemption. California employers with 25 or fewer employees must pay a salary of at least $45,760 annually to exempt employees as well as ensure the employee satisfies the duties test to qualify for the white collar exemption.

 For more information concerning the impact that this proposed new rule could have on your wage and hour obligations, please contact one of the authors or the attorney you usually work with at AALRR, or visit our website at www.aalrr.com.