the dol’s final “white-collar” exemption...

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Paul L. BittnerICE MILLER [email protected](614) 462-2228

The DOL’s Final “White-Collar”

Exemption Regulations

Stephanie S. KellyICE MILLER [email protected](312) 726-8131

Tami A. EarnhartICE MILLER [email protected](317) 236-2235


Effective December 1, 2016

Changes the salary “level,” i.e., amount required for the “white-collar” exemptions

White-collar exemptions affected are the following:

Executive

Administrative

Professional

Computer Related

What do the final regulations change and when?


Salary required is $913 week (current salary levelis $455), or $47,476 per year

Subject to adjustment every three years beginning January 1, 2020 with 150 days notice

Computer related professionals can still be paid hourly - $27.63

Can include non-discretionary bonuses paid at least quarterly – up to 10% of annual salary requirement

Opportunity for "catch-up" payments at the end of each quarter

What do the final regulations change? (cont'd.)


Highly-compensated employees

Salary + compensation = $134,004 (up from $100,000)

Subject to adjustment every three years

Must still get weekly minimum required salary

What do the final regulations change? (cont'd.)


Fixed percentile - 40th percentile of all full-time salaried workers in the lowest-wage Census Region, currently the South (based upon data from the Bureau of Labor Statistics)

Highly-compensated employee level at 90th percentile of all full-time salaried workers in US

How will the adjustment be calculated?


White-collar “duties” tests

Other exemptions, e.g.,

Outside sales employees

Section 7(i) Retail and Service

Motor carrier exemption

Teachers, Lawyers, Doctors

Sugar beet processors (there really IS an exemption), etc.

What don’t the proposed regulations change?


Evaluate exempt positions to determine who falls below $47,476 per year ($913 per week)

Remember – salary ≠ exemption.

Can be salaried, non-exempt if duties test not met

Gather data on hours worked by those employees, which will help in considering best option going forward

What should employers do first?


Can raise salary over the minimum for those who are close

Can change to hourly compensation plus overtime

Can limit overtime

Can still pay salary, plus overtime

Consider changing to fixed salary for fluctuating hours or the fluctuating workweek (“FWW”) (or other alternative pay plan)

What pay options do employers have?


Work must fluctuate from week to week (due to nature of work, not choice)

Must have understanding that the fixed salary covers whatever hours are worked

Salary must equal at least minimum wage if divided by hours worked in any given week

Overtime rate = no less than one-half regular rate of pay

Regular rate = salary/number of hours worked in workweek

How does the Fluctuating Workweek method work?


Communicating the change to employees

Managing the need for previously exempt employees to track time

Modifying pay stubs

Handling unauthorized or “off-the-clock” work

Recording and paying for travel time

Potential Trouble Spots


Spotting and addressing employees using smartphone/emails after hours

Responding to requests for "back" overtime

State law compliance

California employers may be significantly affected, as employees exempt under California’s strict state laws may now NOT be exempt under federal law.

Check other states for any impact, as there is no impact in Illinois, Indiana or Ohio.

Potential Trouble Spots (cont'd.)


Non-profits

Higher Education

https://www.dol.gov/whd/overtime/final2016/

Other Potentially Helpful, Industry Specific Guidance Issued with the New Regulations

the dol’s final “white-collar” exemption...

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