Nearly 5 million people are set to receive a pay increase this spring, if Secretary of Labor Thomas Perez is to be believed. The head of the Department of Labor (“DOL”) has opined that it will issue new rules in the Spring of 2016 raising the minimal salary threshold for exempt “white collar” workers from the current level of $23,660 to $50,440. The new rules will apply to executive, administrative and professional employees, as defined by the Fair Labor Standards Act (“FLSA”).
Perez’s statements, in an interview with Bloomberg News in December 2016, advances the date of the new rules previously given by the Department of Labor. Earlier estimates by the agency put the release date in “July 2016” or “late 2016”. The new date could be the result of the belief by DOL that under the Congressional Review Act (“CRA”), which empowers Congress to review newly promulgated rules by federal agencies, the earlier a rule is released, the less vulnerable it will be to congressional attack.
The proposed changes will significantly increase the number of employees entitled to receive overtime pay under the FLSA and will make an estimated 5 million currently “exempt” employees eligible for overtime pay for all hours worked over 40 in a workweek.
Employers should review their current salary structures and policies concerning who they consider “salary exempt”. At a minimum, employers should determine whether to increase the salaries of the affected employees or re-classify them as “non-exempt”. Employers should start discussing today how to handle the increase in labor costs.