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Final rules that dramatically expand the class of employees entitled to overtime could take effect by spring of 2016. 

The Department of Labor (DOL) sent its final rule revising the white collar overtime exemption regulations of the federal Fair Labor Standards Act (FLSA) to the White House Office of Management and Budget (OMB) on Monday March, 14, 2016.

The proposed rule was issued in July of 2015 and would dramatically expand the class of employees entitled to overtime pay. It proposes to:

• Increase the salary level governing the FLSA’s white collar exemptions from $455 per week ($23,660 per year) to approximately $970 per week (or $50,440 per year) and implement an automatic adjustment to the salary test going forward to ensure that salary levels continue to provide an effective and useful test for the exemption;

• Raise the minimum salary test for the highly compensated exemption from $100,000 per year to $122,148 per year and index the level to the 90th percentile of weekly full-time employee earnings so that the level stays appropriate and relevant over time; and

• Seek additional input as to whether the DOL should alter the duties requirements for various exemptions.

OMB review is the last step in the regulatory process before revised regulations take effect and are published in the Federal Register. The OMB is allotted 90 days to review proposed regulations, but it usually reviews and publishes proposed regulations in far less time. Accordingly, a final rule revamping the white collar overtime exemption regulations could be published as early as this spring.

IMPLICATIONS FOR EMPLOYERS
Larger and more sophisticated employers have been well aware that these changes are coming. Given the likely rollout date, it is time to start planning for them. Large and small employers can and should plan ahead to ensure they will be in compliance with the proposed salary requirements. Although potential changes to the duties test remain unclear, employers may also benefit from considering the nature and sophistication of their workforce and revisiting their staffing needs. As for employees, employees should take a hard look at their pay stubs and consider their job duties and consult a qualified attorney if they feel they are being improperly compensated.

CONTACTS
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact Justin Brooks at jbrooks@gbblegal.com.

GBB assists employers in navigating the complexities of employment law and assists employees in adjudicating their rights.