You know how important it is to correctly classify employees as exempt (not entitled to overtime) and non-exempt (entitled to overtime). You know the Department of Labor and plaintiff’s lawyers like to tag employers guilty of even inadvertent misclassifications for big money in unpaid wages (and penalties, to boot). Did you know the DOL is looking to strengthen protections for workers by narrowing the exempt classifications, meaning more employees will be entitled to overtime pay? Well, now you do. In March 2014 President Obama asked the DOL to update the requirements for exemptions to apply and the DOL is working on this now. The proposal is entitled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.”
One aspect of the proposal employers should be aware of is the salary change. Now, there is a minimum salary requirement for exempt employees of $455/week. This comes out to almost $24,000 a year. The proposal will seek to increase this amount to $42,000, meaning that even if an employee meets the “duties” test under the regulations for an exemption, she will need to make at least $42,000 annually for the exemption to apply. This is a big jump. It makes sense, as $24,000 is a low bar for an exemption. But it is also a significant change that employers will need to carefully review if the proposal is adopted, to make sure its exempt employees meet the new criteria. Stay tuned.