Samuel Calderon v. GEICO General Insurance Co.

Filing

OPINION ATTACHMENT. [14-2111, 14-2114]

Overtime NPRM - WHD Fact Sheet - U.S. Department of Labor -� Wage and Hour Division (WHD)

Appeal: 14-2111

Doc: 50-2

Filed: 12/23/2015

Pg: 1 of 2
All DOL 

WHD    Advanced Search

A to Z |  Site Map |  FAQs |  Forms |  About DOL |  Contact Us | Español

Wage and Hour Division

Was this page helpful?

DOL Home > WHD > Overtime NPRM > WHD Fact Sheet

Wage and Hour Division
FACT SHEET: PROPOSED RULEMAKING TO UPDATE THE REGULATIONS DEFINING AND DELIMITING
THE EXEMPTIONS FOR “WHITE COLLAR” EMPLOYEES
The Department is proposing to update the regulations governing which executive, administrative, and professional employees (white collar workers)
are entitled to the Fair Labor Standards Act’s minimum wage and overtime pay protections. The Department last updated these regulations in 2004,
and the current salary threshold for exemption is $455 per week ($23,660 per year). With this proposed rule, the Department seeks to update the
salary level required for exemption to ensure that the FLSA’s intended overtime protections are fully implemented, and to simplify the identification of
nonexempt employees, thus making the executive, administrative and professional employee exemption easier for employers and workers to
understand and apply.

Key Provisions of the Proposed Rule
The Notice of Proposed Rulemaking (NPRM) focuses primarily on updating the salary and compensation levels needed for white collar workers to be
exempt. Specifically, the Department proposes to:
1. set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually);
2. increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th
percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
3. establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a
useful and effective test for exemption.

/15
22

The Department’s proposal to set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers represents the
most appropriate line of demarcation between exempt and nonexempt employees. This salary level minimizes the risk that employees legally entitled
to overtime will be subject to misclassification based solely on the salaries they receive, without excluding from exemption an unacceptably high
number of employees who meet the duties test. As proposed, this would raise the salary threshold from $455 a week (the equivalent of $23,660 a
year) to about $970 a week ($50,440 a year) in 2016.1

we
ie

12/
d

The Department is also proposing to automatically update the standard salary and HCE total annual compensation requirements to ensure that they
remain meaningful tests for distinguishing between bona fide executive, administrative, and professional workers who are not entitled to overtime and
overtime-protected white collar workers. Experience has shown that the salary level test is an effective measure of exempt status only if it is up to
date.

1, v
211

41

In addition, the Department discusses the current duties test and solicits suggestions for additional occupation examples and requests comments on
the current requirements. Similarly, the Department seeks comment on the possibility of including nondiscretionary bonuses to satisfy a portion of the
standard salary requirement. The Department is not proposing specific regulatory changes on either of these issues.

Background

Since 1940, the Department’s regulations have generally required each of three tests to be met for one of the FLSA’s white collar exemptions to
apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity
of work performed; (2) the amount of salary paid must meet a minimum specified amount; and (3) the employee’s job duties must primarily involve
executive, administrative, or professional duties as defined by the regulations.
Certain highly compensated employees are exempt from the overtime pay requirement if they are paid total annual compensation of at least $100,000
(which must include at least $455 per week paid on a salary or fee basis) and if they customarily and regularly perform at least one of the exempt
duties or responsibilities of an executive, administrative, or professional employee identified in the standard tests for exemption.

How to Comment
The Department encourages interested parties to submit comments on the NPRM. The full text of the NPRM, as well as information on the deadline
for submitting comments and the procedures for submitting comments, can be found at the Wage and Hour Division's Proposed Rule website.
Department will consider all comments received on this proposal in determining the salary level for the Final Rule.

1 The Department of Labor relied upon 2013 data in the development of the NPRM, under which the 40th percentile of weekly earnings for full-time
salaried workers was $921 per week. These figures project what the salary level would likely be in 2016 based on the proposed rule.

Freedom of Information Act |  Privacy & Security Statement |  Disclaimers |  Important Web Site Notices |  Plug-ins Used by DOL

http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm[12/22/2015 1:49:14 PM]

Overtime NPRM - WHD Fact Sheet - U.S. Department of Labor -� Wage and Hour Division (WHD)

Appeal: 14-2111

Doc: 50-2

Filed: 12/23/2015

Pg: 2 of 2

U.S. Department of Labor | Frances Perkins Building, 200 Constitution Ave., NW, Washington, DC 20210
www.dol.gov | Telephone: 1-866-4-USWAGE (1-866-487-9243) | TTY | Contact Us

we
ie

12/
d

1, v
211

41

http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm[12/22/2015 1:49:14 PM]

/15
22