On July 6, 2015, the Department of Labor (DOL) announced several proposed changes to the Fair Labor Standards Act (FLSA), including a proposed increase in the minimum salary required for an employee to be exempt from overtime pay. Currently, employees who earn $455+ per week (and meet certain other criteria related to the type of work performed) are exempt, but the DOL proposes to raise this minimum salary threshold to approximately $970 per week and to provide for additional automatic increases on an annual basis, beginning as early as June of 2016. This change is projected to affect up to 11 million employees in the United States and be of particular significance to retail, hospitality and food-service businesses.
Proponents of the new rule assert that the minimum salary is long overdue for an increase, having stayed the same for over a decade. They argue that the current minimum sets a salary level which is below the poverty rate, allowing employers to skirt paying an honest wage for an honest day’s work.
But those who oppose the rule suggest that it is unrealistic to assume that employers can or will simply increase wages without making cuts elsewhere. Opponents argue that the end result will be that employers will either cut back on hours or eliminate jobs entirely to compensate for the increased wage requirement, and that the change will not yield the additional income intended.
Experts agree that an increase in the minimum threshold for exemption from overtime pay is likely, and as such, it is not too early for employers to begin thinking about how the change will affect their organization. Employers will need to be certain that the hours worked by newly-eligible employees are accurately tracked so that the employer will know when overtime pay is due.
Do you have an opinion on this? The DOL is accepting comments for its consideration through September 4, 2015, after which it will publish its Final Rule.
If you would like more information regarding the proposed FLSA changes and how they might affect you or your business, please feel free to contact us at (248) 477-6300.