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Salary threshold for exempt employees poised to double

June 30, 2015

The White House announced that the long-awaited proposed amendments to the Fair Labor Standards Act regulations concerning the so-called “white collar” exemptions will include a substantial increase to the salary required to maintain exempt status for most executive, administrative, and professional employees. Specifically, the U.S. Department of Labor will propose today that the salary threshold needed to maintain such exempt classifications should increase from $23,660 to $50,440 per year (or $970 per workweek). This amounts to more than a doubling of the current salary requirement. Under the proposed increase, currently exempt executive, administrative, and professional employees either would need to receive a guaranteed salary of at least $50,440 per year, to maintain their exempt classifications, or be reclassified as nonexempt employees and paid overtime pay for all work in excess of 40 hours in a workweek.

The Department of Labor must permit a notice-and-comment period before implementing this proposed change. Consequently, there is no effective date for the proposal at this time (which could be revised following the notice-and-comment period). Nonetheless, the proposed salary increase will affect most U.S. employers and businesses are well advised to begin planning now.

Additional changes to the white-collar exemptions are expected to be published later this week. Please continue to follow Honigman’s Alerts and other publications for further details and information.