By: Micaela L. Neal

Many California employers likely recall the debacle that ensued in 2016 when the U.S. Department of Labor announced it was going to increase the salary threshold for the “white collar” exemptions to federal overtime compensation requirements under the Fair Labor Standards Act (“FLSA”).  The 2016 announcement provided that the salary basis would increase from $455 per week to $913 per week, which was enough of a jump to surpass even California’s salary threshold.  The result was a frenzy at the end of 2016 to reclassify workers not meeting the new salary requirement, only to have a federal court in Texas enjoin the new rule. Many diligent employers who had already reclassified their employees were punished for their diligence with resulting misclassification claims in the years that followed.

The DOL has now announced a new proposed rule that falls somewhere in between the existing rule and the 2016 proposal.  The salary threshold under the newly proposed rule is $679 per week (or $35,308 per year).  However, should this new rule go into effect, it will not affect California employers, as it does not surpass the existing California salary threshold, which is $45,760 per year for employers with 25 or fewer employees, and $49,920 per year for employers with 26 or more employees.  There is thus no need for a reclassification frenzy in California this time around.

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Micaela L. Neal is an attorney with Wanger Jones Helsley PC and practices in Fresno and Sacramento.  She regularly represents employers in wage and hour and other employment matters.  This article is intended to notify our clients and friends of changes and updates to the law and provide general information.  It is not intended, nor should it be used, as legal advice, and it does not create an attorney-client relationship between the author and the reader.