Changes to Overtime Exemptions under the Fair Labor Standards Act

In 2015, the U.S. Department of Labor introduced a proposed rule which would, in part, double the salary threshold required under the Fair Labor Standards Act (“FLSA”) to maintain exempt status under the “white-collar” exemption. The rule, once issued, was declared invalid by the United States District Court for the Eastern District of Texas shortly after it took effect.

This month, however, the Department of Labor announced a new final rule, which increases the earnings thresholds for exempt executive, administrative and professional employees (i.e., the “white-collar” exemption) by 50%. The rule will take effect January 1, 2020.

Generally, to qualify for the “white-collar” exemption, an employee:

  1. must be paid a fixed weekly salary (the “salary basis test”), and

  2. must primarily perform executive, administrative or professional duties in accordance with the Department of Labor regulations (the “duties test”).

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