The U.S. Department of Labor (DOL) has recently proposed a rule that is set to raise the salary threshold for the white-collar overtime exemptions. The proposed rise would see a considerable resurgence from the previous amount of $35,568 per annum to $55,068 annually. Doing the math would tell you that the increase is just slightly under $20,000.
This proposition is prevalent under the federal Fair Labor Standards Act (FLSA), wherein employees are generally entitled to be paid overtime for hours that exceed forty (40) hours in a seven (7) day work week. This rule applies unless an exemption – also known as an overtime exemption – applies. The Department of Labor is reforming the so-called “white collar” exemptions to accommodate this proposed change.
The key impact for employers is that the new rule, if implemented, would significantly increase the number of employees classified as nonexempt and therefore eligible for overtime pay. For large corporations and firms, this could have a significant financial impact.
For legal professionals working in large corporations and law firms, this development is noteworthy. While the final rule is still pending after public comments and DOL review, it is paramount to start thinking of the implications of this rule. It is also a call to start considering possible strategies and changes to time tracking, payroll procedures, and even reclassifying employees to ensure compliance.
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