Proposed Changes to Overtime Eligibility Rules for ‘White Collar’ Workers

white collar workerThe U.S. Department of Labor is proposing to update the rules governing which executive, administrative, and professional employees (“white collar workers”) are entitled to the minimum wage and overtime pay protections of the federal Fair Labor Standards Act (FLSA). In part, the updated rules would result in an increase in the number of employees who would qualify for overtime pay, by significantly increasing the wage threshold under which employees must be paid overtime.

The current federal rules provide an exemption from both the FLSA minimum wage and overtime pay requirements for bona fide executive, administrative, and professional employees who meet certain tests regarding their job duties and who are paid on a salary basis at not less than $455 per week ($23,660 per year). The agency’s proposed rule would raise this salary threshold from $455 a week to a projected level of $970 per week ($50,440 annually) in 2016.

Other highlights of the proposal include changes to the total annual compensation requirement needed to exempt highly compensated employees from the FLSA’s minimum wage and overtime pay protections, and the consideration of two alternative mechanisms for automatically updating the salary and compensation levels going forward.

Unless exempt, employees covered by the FLSA must receive the federal minimum wage of at least $7.25 per hour and overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. (Note: When both the FLSA and a state law apply, an employee is entitled to the most favorable provisions of each law. Be sure to check your state’s wage and hour laws for requirements related to minimum wage, overtime, and exemptions.)