Department of Labor Proposes Significant Increase in Wage Threshold for Exempt Employees

The U.S. Department of Labor has issued a proposed rulemaking that would significantly limit the ability of employers to treat employees as exempt from federal overtime requirements. Under existing law, employers may only be considered exempt from overtime if they hold certain qualifying "white collar" positions and make at least $35,568.00 per year. The DOL's proposed rule would initially increase this yearly salary requirement to $55,068.00. Equally as important, the new rule would include automatic increases to this salary threshold every three year, rather than require the agency to go through the administrative rule making process.

This salary increase is projected to substantially limit the number of positions that may be considered exempt from overtime. Non-profits and other businesses with employees who satisfy the duties tests for various exemptions, but do not meet the new salary threshold would be most impacted. Employers who may be impacted by this potential change should begin analyzing options to restructure positions that may no longer be exempt, as well as determine how best to communicate these changes to their employees should it become law.