Proposed DOL Rulemaking Means Uncertainty for Manufacturers

On June 30, 2015, the U . s . States Department at work (Department of labor) released a Notice of Suggested Rulemaking seeking comments on the proposal to boost the salary threshold for that so-known as “white-collar” exemptions from $455 each week ($23,660 yearly) for an expected $970 each week ($50,440 yearly), as forecasted through the Department of labor for 2016. The Department of labor also proposes the salary basis track the 40th percentile from the earnings of full-time salaried employees, and therefore if adopted this salary threshold would adjust instantly later on without further Department of labor action. The Department of labor further seeks comments around the current responsibilities tests for figuring out whether workers are carrying out work that’s exempt from overtime underneath the executive, administrative, professional, outdoors sales, and computer exemptions.

Underneath the federal Fair Labor Standards Act, companies be forced to pay employees overtime pay of 1 and something-half occasions your regular rate for just about any hrs labored over 40 inside a workweek, unless of course the business can establish the worker is exempt. The salary threshold for “white-collar” exemptions was last up-to-date in 2004. Many states, including Connecticut, Massachusetts, and New You are able to, have separate salary basis and responsibilities tests for figuring out whether workers are exempt.

The DOL’s proposal didn’t include suggested changes towards the responsibilities tests for comment rather, it seeks discuss whether any changes ought to be designed to the responsibilities tests for that “white-collar” exemptions. Particularly, the Department of labor noted difficulties in litigating the “primary duty” test, which requires companies to exhibit that the exempt employee’s primary duty requires the performance of exempt tasks. The Department of labor also noted that some experts accept is as true should think about a guide that needs employees to invest a minimum of 50 % of time on exempt tasks to entitled to the exemption, as completed in California.

If adopted, the DOL’s suggested rule could have a substantial effect on producers. Many working foremen along with other professional, administrative and executive staff presently considered exempt could instantly lose the exemption from overtime because of the raising from the salary threshold. Even individuals who meet that salary threshold in a single year could lose it the following due to the fact their salary didn’t take care of the rate of inflation. (For this author, pegging a rise in the brink salary towards the 40th percentile of salaried employees would appear to place inflationary pressure around the entire spectrum of salaried positions.) Finally, towards the extent the Department of labor changes the “primary duties” test to want greater than 50 % from the employee’s time be allocated to exempt responsibilities, many working administrators and managers would become qualified for overtime without regard for their salary.

These changes may need producers to change their payroll along with other practices. Employees formerly (and correctly) exempt from overtime might not have recorded working hrs or tasks. In other words there wasn’t any have to conduct any job task analysis to demonstrate exempt status. That could not be true. Moving forward, the failure to trace job tasks and time spent may jeopardize the exempt status of not just the specific worker under consideration, however the entire type of employees employed in exactly the same job classification.

The Notice of Suggested Rulemaking was printed within the Federal Register on This summer 6, 2015, and it is susceptible to a 60-day comment period. Your customers may submit comments at world wide before September 4, 2015. When the suggested rule becomes final, the salary threshold increase isn’t likely to work until between 2016. To see the announcement through the U.S. Department at work, click the link. To see the Notice of Suggested Rulemaking, click the link.

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