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LABOR, EMPLOYMENT AND EMPLOYEE BENEFITS LAW UPDATE
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December 23, 2015

U.S. Department of Labor Delays Raising the Salary Threshold for Exempt Employees Under FLSA

On June 30, 2015, the United States Department of Labor ("DOL") issued proposed rules setting forth a new salary threshold for exempt employees under the Fair Labor Standards Act ("FLSA").  If adopted, the new salary threshold would increase from $455 per week, or $23,660 annually, to approximately $970 per week, or $50,440 annually, representing a substantial increase from the amount previously proposed by the DOL in 2014.  In addition, the DOL proposed raising the salary threshold for so-called "highly compensated" employees from an annual salary of $100,000 to $122,148. 
 
Under the proposed rule, the salary level test would be tied to the salary at the 40th percentile of weekly earnings for full-time salaried employees, as determined by the United States Bureau of Labor Statistics.  Similarly, the highly compensated employee threshold would be tied to the 90th percentile of weekly earnings for full-time salaried employees.  By basing these salary level tests on the weekly earnings calculated by the Bureau of Labor Statistics, the salary level tests would be automatically adjusted annually to reflect inflation and wage adjustments. 
 
The DOL received over 300,000 comments on the proposed rule.  Not surprisingly, many businesses criticized the almost doubling of the salary level test. 
 
The DOL announced in the DOL Regulatory Agenda Publication a delay in issuing the final rules until after July 1, 2016.  It is expected that the final rules will be issued before the end of 2016.  The DOL Solicitor (General Counsel) also advised the American Bar Association that the issuance would be delayed until the Fall, but the Secretary of Labor recently stated, however, that he expected the rules would be released in the Spring.  
 
We will continue to monitor the DOL's actions in this area and will provide an update once final rules are published.  In the meantime, if you have any questions regarding the new proposed salary level test and the highly compensated employee threshold, or need any assistance in preparing for or implementing any required reclassification once the DOL's rules are finalized, please contact us.  

Labor, Employment & Employee Benefits Group  

Mirick O'Connell

100 Front Street

Worcester, MA  01608

t 508.791.8500

f 508.791.8502

 

1800 West Park Drive, Suite 400

Westborough, MA  01581

t 508.898.1501

f 508.898.1502

 


Mirick O'Connell is a full-service law firm with offices in Worcester, Westborough and Boston, Massachusetts.  The Firm's principal practice groups include Business;
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This client alert is intended to inform you of developments in the law and to provide information of general interest.  It is not intended to constitute legal advice regarding a client's specific legal issues and should not be relied upon as such.  This client alert may be considered advertising under the rules of the Massachusetts Supreme Judicial Court.