Wednesday, March 23, 2016

Hippity, Hoppity, Is the Final White Collar Salary Rule On Its Way?

The highly anticipated final white collar salary exemption rule (“Final Rule”) is one step closer to becoming reality. The proposed rule would raise the minimum weekly salary requirement for the FLSA “white collar” exemption from the current $455 per week amount ($23,660 annually) to $970 per week ($50,440 annually). You can read our earlier post about the proposed rule here.

On Tuesday, March 15, the U.S. Department of Labor sent the Final Rule to the White House Office of Management and Budget (“OMB”) for review, ahead of the expected review and release schedule. The specific provisions of the Final Rule will not be known until the OMB review is completed and the Final Rule is published. The OMB review typically takes between 30 and 60 days. This means that we may see publication of the Final Rule in April or May of this year, with implementation taking place sometime thereafter.

In response to the submission of the Final Rule to OMB, Republican members of the House and Senate introduced bills, within two days of the OMB submission, to try to stop advancement of the Final Rule. The proposed legislation would require the Secretary of Labor to nullify the proposed rule and conduct an economic analysis to determine the impact of the proposed changes on employers. In addition, the legislation would prohibit automatic increases in the white collar salary threshold and require that any future changes to the exempt duties test be subject to notice and comment.

Because the Final Rule is much closer to possible implementation, it is more important than ever for employers to begin planning for how they will address the Final Rule. Options include potential salary increases for exempt employees or the potential reclassification of employees as non-exempt from overtime.

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