In an unexpected turn of events, millions of employees who are currently overtime-exempt may now qualify for overtime pay … far earlier than originally anticipated. Under the Fair Labor Standards Act (FLSA) covered workers—unless exempt—must receive overtime pay for all hours worked over 40 in a work week, at a rate not less than one-and-one-half times their regular rates of pay.

The Dept. has initiated a proposed rule-making process to update its regulations governing which white collar workers (i.e., executive, administrative and professional employees) will be entitled to the FLSA’s overtime pay protections. On March 14, 2016, the U.S. Dept. of Labor submitted its final revisions to the Office of Management and Budget (OMB) for review. The DOL presently seeks to expand the eligibility of employees who could earn “time-and-a-half” pay for working in excess of 40 hours per week. The current threshold is an annual salary of $23,660, or $455 per week. However, the DOL’s proposed regulations are nearly double the standard salary test—an annual salary of $50,440, or $970 per week. This constitutes the 40th percentile of weekly earnings for full-time, salaried workers. The Dept. also proposes to set the highly compensated employee (HCE) annual compensation to approximately $122,148.

As many know, the FLSA’s white collar exemption regulations have remained unchanged since August 2004. Last July, the DOL published its Notice of Proposed Rulemaking (NPRM) to the Federal Register. The federal agency invited public comments up until early September 2015 and, not surprisingly, received numerous responses to its proposed revisions. Deadlines have shifted to some degree but, initially, changes were not expected to take effect until the end of 2016 or early 2017.

What do these changes mean for employers? Employers are encouraged to remain increasingly vigilant, as it is uncertain when precisely when the new regulations will become effective. Following the OMB’s review, which will take place over an undetermined period of time, the final regulations will be published in the Federal Register. Employers should be prepared to move quickly to ensure compliance with the new regulations once implemented. If you have any questions regarding these changes and the impact on employers, please contact attorney Frank Hatfield at fhatfield@fishelhass.com.