A recent filed in the US Senate would block or put on hold proposed changes to the “white collar” exemptions under the Fair Labor Standards Act (“FLSA”). Sen. Tim Scott of South Carolina filed the Protecting Workplace Advancement and Opportunity Act (“PWAOA”) (S.B. 2707) in March of this year after the Department of Labor put its proposed changes out for public comment.
The FLSA provides two main protections – a federal minimum wage and overtime for individuals who work more than 40 hours in a work week. However, there are number of exemptions to the overtime rule. The exemptions commonly referred to as the “white collar” exemptions are:
- executive employees
- administrative employees
- professional employees
- computer employees
- outside salespersons, and
- highly compensated employees.
While each of the exemptions has a different duty test for qualification, each has a salary threshold which also be met. Currently, the salary threshold for most of the white collar exemptions is $455 per week ($23,660 per year). The proposed rule would raise this salary threshold to $970 per week ($50,440 per year) with a mechanism in place for annual adjustments. Highly compensated employees must make more than $122,418 annually under the new proposal.
If the PWAOA is not passed and the proposed rules go into effect, many employers will need to look closely at their current exempt employees to ensure compliance. Employees that do not meet the new requirements must be classified as non-exempt and would be eligible for overtime pay for any hours worked in excess of 40 in a work week.
If you have any questions regarding your employee’s exemption status, please contact Smith Reed & Armstrong, PLLC here for an evaluation.