THE PROPOSED BASE SALARY LEVEL
Currently, employers are not required to pay overtime (time-and-a-half) to salaried white collar workers who earn over $23,660/year assuming the duties test is met. DOL has proposed increasing that threshold to $50,440 as of 2016, which is the 40th percentile of earnings for all full time salaried workers. This is a 102% increase in the salary threshold. DOL considered several other alternative salary thresholds, including:

• Adjusting the current level—which was set in 2004—for inflation, which would be $29,172. This equals approximately the 15th percentile of earnings for all full time salaried workers and is a 23 percent increase over the current threshold.
• Applying the same formula used to update the salary in 2004, which was set to the 20th percentile of earnings for full time salaried employees in the South and retail. This would result in a minimum salary threshold of $30,004. This equals approximately the 15th percentile of earnings for all full time salaried workers and is a 27 percent increase over the current threshold.
• Setting the new minimum threshold at median earnings for all wage and salaried workers combined, which is $40,352. DOL said that this median provides a “rough dividing line between the generally lower paid hourly worker who are overtime protected and the generally higher-paid salaried workers who may be exempt.” This equals approximately the 30th percentile of earnings for all full time salaried workers and is a 71 percent increase over the current threshold.
• Adjusting the 1975 “short test” level for inflation, which would be $56, 316. This equals approximately the 50thth percentile of earnings for all full time salaried workers and is a 138 percent increase over the current threshold.

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* 1. What size is your business?

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* 2. Which level do you think DOL should use:

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* 3. How will reclassifying employees impact your workforce?

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* 4. How might the proposed increase to the minimum salary level alter how you compensate your employees?
For example:
Which employees are you likely to convert from currently exempt status to non-exempt? Those earning:

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* 5. How might the proposed increase to the minimum salary level alter how you compensate your employees?
For example:. Raise their salary to keep them exempt? Those earning:

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* 6. Will the proposed minimum salary level impact whether you provide employees with certain technology? For example, are you less likely to provide non-exempt employees phones or computers they can use remotely because of difficulties in tracking their hours?

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* 7. Will the proposed minimum salary level impact whether you allow certain employees to work remotely? For example, are you less likely to allow non-exempt employees to work remotely because of difficulties in tracking their hours?

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* 8. Will the proposed minimum salary level impact whether you will award employees incentive-based compensation such as bonuses and commissions? For example, if employees are reclassified as non-exempt because of the change, will they no longer be eligible for certain bonuses?

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* 9. Do you anticipate changing the fringe benefits (e.g. sick leave, vacation, insurance) you offer employees if the proposed minimum salary levels go into effect? For example, if employees are reclassified as non-exempt because of the change, will they lose eligibility for certain fringe benefits?

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* 10. Do you envision training/career progression opportunities changing if employees need to be reclassified as non-exempt?
For example, will the change lead to a reduction in opportunities for professional development because non-exempt employees are less likely to be given opportunities to travel for training, conferences, and networking opportunities?

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* 11. HIGHLY COMPENSATED TEST
The proposal would increase the threshold for the highly compensated test from $100,000/year to at least $122,149/year based on 2013 numbers. Will this change have an impact on your operations?

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* 12. ANNUAL INCREASES TO THE MINIMUM SALARY
From 1938 through 1975, DOL updated the salary level every 5-9 years. Following 1975, however, updates to the salary level have been infrequent: 30 years (from 1975 to 2004) and 11 years (2004-2015) to the current proposed update. As a result, DOL proposes to automatically increase the minimum salary level on an annual basis.
Do you think annual increases to the level will negatively impact:

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* 13. How frequently would it be reasonable to increase the minimum salary level for exempt status?

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* 14. How much notice for an increase would be reasonable?

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* 15. How much of a hardship will 60 days’ notice impose as far as determining how to alter operations in light of reclassifications that may be necessary?

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* 16. Please explain any changes you will make to your operations or on how you classify employees as a result of the automatic updates proposed by DOL.

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* 17. Should DOL make any changes to the primary duties test?

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* 18. Should DOL impose any type of time percentage threshold for the duties test (i.e. a test similar to California’s “more than 50% test)?

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* 19. Explain how eliminating the concurrent duties test (i.e. the provision in the regulations that allows exempt employees to concurrently perform exempt and non-exempt work such as a manager who supervises employees and serves customers at the same time) would impact your institution.

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* 20. VI. IMPLEMENTATION COSTS
The DOL requests that commenters provide any data regarding the amount of time that will be required to review and comply with the proposed regulations. The DOL has estimated that the implementation costs will be:
One hour per affected employee ($34.19 per employee) to make the applicable adjustments, including determining an employee’s exemption status, notifying employees of policy changes, and updating payroll systems (Adjustment Costs)

Is DOL’s estimate accurate?

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* 21. What value would you estimate?

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* 22. An additional five minutes per week ($173.68 per employee/per year expected to be reclassified as overtime eligible) spent by management scheduling and monitoring each affected employee in order to avoid paying overtime (Managerial Costs).

Is DOL’s estimate accurate?

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* 23. What value would you estimate?

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* 24. One hour per business ($34.19) will be required for businesses to read and become familiar with the requirements of the rule (Regulatory Familiarization).

Is DOL’s estimate accurate?

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* 25. What value would you estimate?

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* 26. Will the proposed changes will negatively impact employee morale and if so, how?

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* 27. Do you think the proposed changes will lead to an increase in litigation and legal costs and if so, why?

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