Secretary of Labor Thomas Perez announced yesterday that the U.S. Department of Labor has submitted a proposed rule on the white-collar FLSA overtime exemptions to the Office of Management and Budget (OMB). The proposed rule is in response to President Obama’s March 13, 2014 directive to the Secretary to revise the current regulations because of actual or perceived abuses of the exemptions and because the salary basis test has failed to rise at the rate of inflation. The salary threshold was last increased in 2004, during the Bush Administration.

Although we do not have access to the proposal itself, the proposed rule is expected to make it more difficult to qualify for the administrative, professional and executive exemptions from overtime payments under the FLSA by raising the required minimum salary and/or by making amendments to the job duties necessary to qualify for the exemption. We can expect the proposed rule to become public after OMB reviews and approves it. While we wait for the proposed rule, businesses can best prepare for changes by taking stock of the number of positions classified as exempt and evaluate those that may be at risk.