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Federal “White-Collar” Exemptions Under FLSA to be Revised

As part of an ambitious plan to update the provisions of the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA), President Obama issued a Presidential Memorandum that directed the Department of Labor (DOL) to update its FLSA regulations. Specifically, the memorandum stated that FLSA’s white-collar exemptions for executive, administrative, and professional employees are outdated. As a result, workers are not afforded the necessary protections for their wage rights. Currently, employees who earn a salary at or above $455 per week and who perform executive, professional, or administrative duties are not protected by FLSA’s minimum wage and overtime requirements. Additionally, the current regulations exempt an employee who performs executive, professional, or administrative duties and earns at least $100,000 annually.  

In response, DOL issued a Notice of Proposed Rulemaking earlier this year detailing proposed changes to its current FLSA regulations. The proposed rule would raise the salary threshold for the white-collar exemption from $455 to $921 per week or, for highly-compensated employees, from $100,000 to $122,148 annually. The proposed rule also establishes a mechanism that automatically updates the salary and compensation levels to ensure that it continues to be relevant to the current state of wages.  

According to DOL, the current salary thresholds no longer provide an effective test for the white-collar exemption. Updating the salary threshold will help minimize the risk that employees who should be entitled to overtime will be misclassified based solely on the salaries they receive. DOL believes that this would help simplify the identification of nonexempt employees and make it easier for employers and workers to understand and apply the executive, administrative, and professional exemptions under FLSA.

Until the proposed rules are finalized, the current regulations remain in effect. If you are facing a wage dispute and believe that your employer is unlawfully exempting you from minimum wage or overtime, Dejban Law can help you pursue your claims under FLSA. For a free and confidential initial consultation, please contact us now by email at info@dejbanlaw.com or by phone us at (818) 325-3820.