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By: Daniel Bernstein, Esq.
Iseman, Cunningham, Riester & Hyde LLP
Albany/Poughkeepsie, New York

President Obama vowed last year to extend overtime protection to millions of additional white collar employees.  Consistent with that vow, the U.S. Department of Labor published a proposed rule earlier this month that would significantly raise the minimum salary threshold for the executive, administrative, and professional overtime exemptions under the federal Fair Labor Standards Act (“FLSA”).  While a $23,660 annual salary currently satisfies the FLSA’s salary test, the proposed new rule would increase the threshold to approximately $50,440 a year.  It is anticipated that this new threshold would expand overtime coverage to nearly 5 million white collar workers in the U.S.

While New York State law has a higher salary threshold than current federal law for executive and administrative white collar exemptions – $34,125 in New York versus $23,660 under the current FLSA – the new proposed federal threshold is significantly higher than the New York requirement and would expand overtime pay to many employees in New York who are currently exempt.

A surprise to many was what the Department of Labor’s proposed rule did not include.  In the pre-publication period, the rule was widely expected to alter the duties test for managers to limit the permissible amount of time managers engaged in hands-on duties while classified as exempt (i.e. to no more than 50 percent of work time).  This would result in many mid- and low-level managers losing exempt status.  Ultimately, and surprisingly, the proposed rule did not include changes to the managerial duties test.  However, the possibility remains that the final rule, after the comment period, may alter the test.

Business owners who may be affected by, and would like input into, final changes, may want to consider submitting comments to the Department of Labor.  The comment period is now open and ends September 4, 2015.  Full instructions for submitting comments are contained in Notice of Proposed Rulemaking, are available here.

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