Department of Labor Announces Proposal for Massive Changes to Overtime Entitlement

The Department of Labor has issued some proposed changes to the overtime regulations pursuant to the Fair Labor Standards Act.  This is the first amendment since 2004 and if finalized, it will have significant impact on businesses.

The major change proposed is an increase to the salary level to qualify for exemption from overtime.  The current level is $455 per week ($23,660 annually) and that would increase to $921 per week or $50,440 annually.  Obviously, this is a significant increase that will have a substantial impact on who must be paid overtime.  Additionally, the DOL proposes to automatically update the salary level on an annual basis for the first time ever.  The DOL estimates that it would extend overtime protection to over 5 million workers.  Of course, this means increased wages/costs to businesses.

There is also discussion to modify the duties test for white collar exemptions.  The DOL is proposing a strict division of labor test requiring individuals to spend at least 50 % of their working hours performing executive, administrative or professional duties.

Another change is to the highly compensated individuals.  The current salary level is $100,000 and the proposal is to increase it to $122,148.

The Department of Labor seeks comments on the proposed changes until September 4, 2015.  Companies are encouraged to submit comments to (80 FR 38515).  Contacting your Senators and Congressional representatives would be highly encouraged as well.

Kelly Schoening Holden is a Partner in the law firm of Dressman Benzinger LaVelle, with offices in Cincinnati, Ohio, Crestview Hills, Kentucky, and Louisville, Kentucky.