Employment Alert - U.S. DOL Announces Notice of Proposed Rulemaking to Update White Collar Exemption from Overtime

3/13/2019

As you may recall, back in March of 2014, then President Obama directed the Department of Labor (DOL) to address the outdated provisions of the Fair Labor Standard Act to ensure that employees were adequately paid for long hours worked. In 2016, the DOL introduced final rules which increased the salary basis for employees who could qualify for the FLSA "White Collar" exemption administrative, executive, or professional exemptions. Then, the U.S. Department of Justice under President Trump declined to appeal a lower court ruling related to the proposed changes, effectively killing that rule. The DOL went back to the drawing board. 

Finally, on March 7, 2019, the DOL announced its long-awaited proposed rule to update the White Collar Exemptions from overtime. The DOL proposed to rescind the 2016 rule and propose a new rule which updated the minimum weekly standard salary level (Salary Basis) and to update the total annual compensation requirement for the "highly compensated employee" test, and other revisions for specific U.S. territories and industries. 

White Collar exemptions are covered under Section 13(a)(1) of the FLSA which exempts "bona fide" executive, administrative, professional, outside sales, and computer employees from the minimum wage and overtime requirements. The statute and regulations generally have required three things:  (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; (2) the amount of salary paid must meet a minimum specified amount; and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations. 

The DOL took what it considers to be a "straightforward approach" and only addressed the Salary Basis for the exemptions and did not address the other components of the exemption test, specifically the "duties" test which is outdated and has frankly been a catalyst for most of the exempt status litigation. 

Click here to view the complete employment alert including the summary of the new proposed rule.