White-collar exemption coming soon

White-collar exemption coming soon

Bulletin Type: 
Benefit Bulletins

The much-talked-about changes affecting the white-collar worker exemption are expected to be released sometime this summer.* The final rule was released mid-March by the U.S. Department of Labor to the White House Office of Management and Budget (OMB). The OMB has up to 90 days to review the rule. Once approved, the rule will be published in the Federal Register. It appears the DOL’s earlier estimate of a July release date is likely to be met.

The current standard salary level required for exemption is $455 a week ($23,660 annually for a fulltime worker) and was last updated in 2004. The proposed rule increases the salary test to $970 a week ($50,440 annually) in 2016. The exemption for highly compensated individuals could move from $100,000 annually to $125,148 annually. These amounts would be adjusted annually to align with salary percentile thresholds (40th percentile for full-time salaried workers; 90th percentile for highly compensated workers) or changes to the Consumer Price Index. 

Employers affected by the upcoming changes should have strategies in place to either reclassify employees or make salary changes. Once the final rule is published, the effective date could be as soon as 30 to 60 days later.

Questions about the new changes can be directed to Shirley Lind, CEBS, SPHR, who leads Bukaty Companies’ Human Resources division, at slind@bukaty.com.

*On March 17, House and Senate Republicans introduced legislation calling for the exemption changes to be stopped. Bukaty Companies will continue to monitor this important issue.