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More Starch in the White Collar Exemption

Previously, we published a blog post on the DOL's 2015 proposal to more than double the threshold under which salaried exempt employees are eligible for overtime payment. The proposal raises the salary threshold from $23,660 per year to $50,440. The Department of Labor received almost 300,000 comments on the regulation and on Monday sent the anticipated final overtime regulation to the Office of Management and Budget.

This sets into motion a review period that can last up to 90 days—however, the deadline can be extended by either the Office of Management and Budget or the Department of Labor. Additionally, the Office of Management and Budget could also decide to return the rule to the Department of Labor for further consideration—with a potential recommendation to decrease the threshold number from the $50,440 range to a figure in the high $40,000 range. The movement to the Office of Management and Budget was a bit ahead of schedule, pushing up the date in which the final rule could be made public from a July estimate to April or May.

Now is the time to audit your current pay practices to stay ahead of the implementation of any increase in the salary threshold.

  • Are all your salaried exempt employees making over $50,440 per year? If not, first, are these individuals properly classified as exempt under the administrative, professional, or executive exemption?
  • Next, is it fiscally conceivable for you to increase the wages of your exempt staff to this level? If not, how often is this position working overtime?
  • What effect will a change in this employee's status from exempt to non-exempt have on your organization (both fiscally and culturally)?

Even if all of your salaried exempt employees are making over $50,440 per year, now is a good time to perform a self-audit to determine whether these individuals are properly classified. Contact a member of Verrill Dana's Labor & Employment Practice Group to further discuss best practices as to wage and hour issues, the DOL's overtime proposal, or how to conduct a meaningful wage and hour audit.