Department of Labor’s Exempt Status & Minimum Wage Proposed Rule Changes: Begin Preparations - Tilson


Department of Labor’s Exempt Status & Minimum Wage Proposed Rule Changes: Begin Preparations

Regulations & Compliance | October 2015

Since the proposed rule changes for defining and delimiting exempt employment were published on June 30th of this year, businesses have been left to speculate as to the impact it will have on their budgets and bottom-line.  While some minute details will need to wait to be filled in by the final rules which are yet to be issued by the U.S. Department of Labor (DOL), enough information is currently available and there has been time for employment law experts to opine so that some precautionary measures can be addressed and taken.   With that in mind, here are some additional housekeeping items to add to this end of year’s ‘to-do’ list:

Minimum Wage

One of the more substantial changes proposed is the change to the minimum wage.  As it currently stands, positions which are exempt and paid on a salary basis also had to pay a minimum salary amount of $23,660, annually.  The proposed rule change would raise this minimum salary amount to $50,440, annually.

Without knowing at what amount the final rule may designate the minimum wage amount or how quickly into 2016 the amount may be required to be implemented, it is better to prepare for a fast implementation at the amount originally proposed by the DOL.

  • Create a spreadsheet of the annualized amounts being paid to your exempt employees,
  • Review where your exposure lies (i.e., those paid below the $50,440.00 level) AND
  • Either forecast the cost of bringing those individuals into compliance via increasing their salary OR
  • Placing the individual into a non-exempt role for which overtime pay becomes a consideration.

Duties Test

Other proposed changes revolve around the determination of exempt versus non-exempt status, often referred to as the duties test.  For each exempt status (i.e., administrative, professional, executive), there is a list of job responsibilities the job must include to be considered exempt.  It is widely held that the proposed rule changes will include more rigorous testing.

The beliefs of experts on this issue hold the more rigorous testing will translate to ensuring that individuals in exempt roles are spending the majority of their time at work engaged in those exempt job duties.  The specifics here are lacking at the moment.  As an example which the DOL may mirror, however, the state of California currently requires 50% of exempt employees’ time be spent on exempt functions.

Another proactive step your organization can take is a review of your current job descriptions to include:

  • Review of the documented essential duties & responsibilities.
  • Compare the essential duties & responsibilities to the exempt status tests currently published by the DOL to be sure positions are accurately categorized as exempt or non-exempt.
  • Determine the amount of time the position performs each duty & responsibility.

Much information is still forthcoming with regard to the DOL’s proposed rule changes including the when the announcement will occur and what the deadline to enact changes will be.  In light of such uncertainty, a little preparation now can help fill in some of the proverbial blanks and ease transitions later.

Information Not Legal Advice:  This website has been prepared for general information purposes only.  The information on this website is not legal advice.  The law may vary from state to state, so that some information in this website may not be correct for your jurisdiction.  Finally, the information contained in this website is not guaranteed to be up to date.  Therefore, the information contained in this website cannot replace the advice of competent legal counsel licensed in your state.

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