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RISK INSIGHT: Court Blocks “White Collar Rule”

Property & Casualty

On November 22, 2016, a federal judge blocked the implementation of a Department of Labor (DOL) rule regarding overtime wage payment qualifications.  The rule, known as the “White Collar Rule”, was set to go into effect on December 1, 2016.  The “White Collar Rule” is part of the Fair Labor Standards Act (FLSA) and governs which executive, administrative, and professional employees (white collar workers) are entitled to the FLSA’s minimum wage and overtime pay protections.

Below is a quick review of the current law and final rule which has been blocked by a federal judge:

Current rule:

  • The minimum salary level for executive, administrative and professional exempt employees is $23,660 per year and the minimum salary for highly compensated employees is $100,000 per year.

Final rule (blocked):

  • The minimum salary level for executive, administrative and professional exempt employees was scheduled to be set at the 40th percentile of weekly earnings. That would have increased the minimum exempt salary level to $47,476 per year and raised the threshold for highly compensated employees to $134,004 per year

Key Takeaway

The ruling by the federal judge means that employers do not have to raise salaries to comply with the new overtime threshold.  However, employers should be aware that an appeal of the ruling is possible.  Employers should monitor this case as changes could affect your organization.  We encourage clients to work with your M3 Account Team to make sure your insurance policies accurately reflect federal regulations.

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