Founder and Managing Partner
Over the past few years, the Department of Labor (DOL) has attempted to enact updates to the overtime exemptions under the federal Fair Labor Standards Act (FLSA) including most notably, the controversial salary and job duties requirements applicable to the executive, administrative, and professional exemptions from the FLSA’s overtime requirements. However, these efforts have been delayed by court intervention and presumably by the change in presidential administrations in 2017.
The current minimum salary level for the FLSA exemptions is $455 per week, or $23,660 per year. As we have covered in our previous updates on this subject, under the Obama administration, the DOL revised its regulations that would have increased the weekly salary requirement to $913 per week, or $47,476 per year effective December 1, 2016. However, that change was blocked by a federal court in November 2016.
To get the process back on track, on July 26, 2017, the Department of Labor issued a Request for Information, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees. The comment period under this Request for Information ended on or about September 25, 2017. This Request for Information was one opportunity for the public to provide input and assist the DOL in formulating a proposal to revise the white collar exemption parameters. Now, the DOL has announced dates and locations for public listening sessions to allow further opportunity for the public to provide input on issues related to the salary level test, such as:
- What is the appropriate salary level (or range of salary levels) above which the overtime exemptions for bona fide executive, administrative, or professional employees may apply?
- What benefits and costs to employees and employers might accompany an increased salary level?
- What is the best methodology to determine an updated salary level? Should the update derive from wage growth, cost-of-living increases, actual wages paid to employees, or some other measure?
- Should the Department more regularly update the standard salary level and the total-annual-compensation level for highly compensated employees?
These listening sessions (none of which are set to take place in California) will provide the public with another opportunity to offer suggestions regarding the regulations. The DOL’s Wage and Hour Division will conduct the sessions, and according to the DOL’s regulatory agenda, it intends to issue a notice of proposed rulemaking on this subject in early 2019.
Although California has its own salary and duties tests for the white collar exemptions that are generally more rigorous than the current tests under the FLSA, California employers are nevertheless highly interested in this subject as the prior proposed 2016 changes to the FLSA regulations would have set a salary level that exceeded the minimum salary level for white collar exemptions under the California Wage Orders. We will provide further updates on the DOL’s actions and any further developments regarding the FLSA exemption tests.