Back in March 2014 President Obama instructed the US Department of Labor (DOL) to assess the “White Collar” exemptions under the Fair Labor Standards Act (FLSA) for possible revision.

On June 30th, the exemptions saw their first revisions since 2004 when the DOL announced a proposal for a new rule regarding the salary basis which applies to the executive, administrative, and professional assessments which employees must meet to acquire minimum wage and overtime requirement exemptions under the FLSA.

The proposed changes will affect industries where managers frequently work long hours for low pay with responsibilities outside of management role. We expect the retail and hospitality industries to be among the most impacted.

The Current Rules

Currently, exempt status is most accurately tested depending on an employee’s salary level. In order to meet the test, the minimum salary level required is currently $455 per week ($23,660 per year). The employee’s duties are then analyzed to determine whether his/her job should be considered exempt. Employees making a salary of $100,000 per year or more are automatically exempt under the current rule.

Proposed Revisions

The DOL proposes to change the rules by:

• Raising salary threshold to $921 per week or $47,892 per year.
• Increasing highly compensated employee salary threshold to $122,148 per year.
• Updating the standard salary and compensation levels automatically on a yearly basis to ensure they are upholding their value. This can be done by maintaining levels at a fixed percentile of earnings or by updating amounts based on changes to the CPI-U (Consumer Price Index for all Urban Consumers).

What’s Next?

A 60 day comment period begins once the proposed rules are published in the Federal Register.

You can submit comments electronically through the Federal eRulemaking Portal or by mail.

Questions? Contact any member of our Hospitality Services Group.