Professional Service Agreement

$56,680 Salary Minimum for Exempt Employees may be on the Horizon

February 04, 2015

A group of 26 Democratic senators reaffirmed their support for updating the Department of Labor's overtime regulations to boost workers' overtime pay in a letter to President Obama late last week. Led by Patty Murray (D-Wash.), the top Democrat on the Senate (HELP) Committee, and Bernie Sanders (I-VT), the senators on January 29th specifically urged the President to raise the overtime threshold for salaries workers to $56,680 a year in order to ensure that "more middle-class workers are paid fairly for overtime hours."

This affirms what we have anticipated in that the current salary exemption of $23,660 (or $455 a week) is expected to at least double. That means that an entire swath of employees who make between $23,660 a year and $56,680 a year will now be subject to overtime pay requirements, regardless of their duties. Employers will need to evaluate just how many employees this will affect and begin budgeting for the eventuality. The DOL is currently expected to announce their proposed changes in March 2015; already a delay from November 2014. Employers should also plan for the exemption for executive, administrative, or professional roles to become somewhat more constricted, as there is consensus that regulations regarding these roles tighten. We may see a minimum threshold for the amount of an employee's time that must be performed in a "white collar" role to continue to be exempt.

There is no action required by employers at this time but planning for the inevitable is prudent. We very well may see the regulatory landscape change in the second half of 2015. Employers are urged to begin assessing potentially affected employees and developing plans to address both compensation and time management practices. SESCO has been performing such reviews since our founding in 1945. We will continue to monitor this development and will keep our clients abreast of further activity.