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The U.S. Department of Labor Plans to Increase the Salary Basis for White Collar Exemptions

The “white collar exemptions” were originally intended to apply to well-compensated executive, administrative, and professional employees. Under federal law, the minimum annual salary that must be earned is $23,660, or $455 per week. This low salary threshold has been in place for years and means many employees, including, for example, poorly paid convenience store managers, or assistant fast food managers, earn less than the current poverty level for a family of four and yet are deemed exempt from overtime. On July 6, 2015, the DOL issued proposed rulemaking by which this annual salary threshold would be increased by over 100% to $47,892, or $921 per week. This new minimum salary would be at the 40th percentile of weekly earnings for full-time salaried employees. According to the DOL, this increased salary level will mean more than 4.6 million additional employees are eligible for overtime. It is currently anticipated these new rules will not go into effect before July 2016.

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