Latest on Exempt Updates

Back in March of 2014 President Obama instructed the Department of Labor to take a look at the rules for exempt employees and gave them 18 months to do it. The two main areas to be scrutinized were the job duties of executives and the salary level.  The Huffington Post is now reporting that we are getting some preliminary numbers for that salary level.  These are just being kicked around right now but it will give us some insight as to how the law may be changed.  As a reminder this change can be done by executive order so it can come as quickly as February of this year.  Currently we are at $455 per week or $23,660 per year.  This was the change brought about in 2004 under President Bush.  The previous change occurred under President Nixon in 1975 when it was raised to $155 per week.  At that time roughly 65% of salaried workers fell under that threshold and were entitled to overtime.  Under the current levels only 11% of salaried workers are under the limit therefore subject to overtime.  The discussion is how high to bring that number.

$51,000: this is being touted as the level to use to bring the percentages back in line with the 1975 figures as adjusted for inflation and other economic factors.  This would cover 47% of salaried workers.

$58,000:  this is the number that the DOL’s own economist is pushing which would cover an estimated 54% of salaried employees.

$42,000: This is the number that is being touted as the White House target number.  This would cover 35% of salaried workers.

Pressure is being placed upon the White House to raise the number as high as possible to ensure the broadest overtime coverage.

The final rules should be announced in February and we will bring them to you as soon as they are released.

2 thoughts on “Latest on Exempt Updates”

  1. Am I understanding this correctly? If a company hires a new college graduate at a salary (no overtime) of $30,000, if one of these new numbers ($42,000 or $51,000 or $58,000) becomes the new number then any hours the new college graduate works over 40 in a week will be subject to overtime? I work for a public accounting firm (don’t know the pay for the new hires) but we work a lot of overtime hours between now and April 15 – since we are in a “professional” industry, would this new rule apply to these employees?

    • Yes you are essentially correct. The employee has to pass the job duties requirements of professional, which he or she would, and then be paid on a salary basis of one of these numbers, the lowest being $42,000. Both tests must be met to qualify as exempt.


Leave a Comment