NEW ORLEANS – Whitney Harmon and Ken Weber, lawyers with Baker Donelson, said the U.S. Department of Labor’s (DOL) proposed new regulations will dramatically increase the number of employees who must be paid on an hourly basis in New Orleans and all over the nation. Before the regulations, they said, employees who earned $455.00 per week (or $23,660.00 per year) could qualify as exempt.
Now, the DOL's proposed regulations dramatically increase the minimum salary threshold for exempt status to $50,440.00 ($970 per week), Harmon and Weber said. This increase will cause many employees who had been classified as exempt to be classified as non-exempt, and therefore they must be paid on an hourly basis.
The DOL is also considering whether non-discretionary bonuses and incentive payments should be included to determine whether the new salary threshold has been met, Harmon and Weber said.
The proposed regulations also increase the highly compensated threshold from $100,000.00 to $122,148.00 to ensure those employees meet every other requirement of the highly compensated employee test, Harmon and Weber said.
Further, to prevent the new salary levels from becoming outdated, the Baker Donelson lawyers said the Department is proposing to include an automatic annual update to the salary and compensation thresholds using either a fixed percentile of wages or the Consumer Price Index for urban consumers.
The DOL did not alter the various job duties required for the "white collar" exemptions, they said. Instead, it is seeking comment as to whether the tests are working.
In its statement, the DOL admitted the proposed rulemaking will "transfer income from employers to employees in the form of higher earnings."
Harmon and Weber said they believe these new regulations significantly change the classification landscape for exempt employees and will require all employers to review and revise their employee classifications in order to remain compliant with the FLSA.
They recommend all employers to audit their current exemptions in light of these changes.
Baker Donelson will host a complimentary webinar on the new regulations on Monday, July 6, 2015, from 11:30 a.m. – 12:30 p.m. ET/10:30 a.m. – 11:30 a.m. CT.
