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August 2015 • www.CPAPracticeAdvisor.com 29 B y de f i n it ion a n e mplo y e e i s considered nonexempt – subject to overtime (time and ½ over 40 hours of work in a workweek–by federal standards) unless the employee can fa l l into one of four categor ies of e xempt ion. T hese categor ies a re executive, administrative, profes- sional and high salaried. Two addi- t iona l categor ies have add it iona l specifc conditions – they are outside sales and computer positions. T h e s a l a r y t e s t f o r e x e m p t employees was $250/week. In 2004 the department of labor revised the overtime regulations and made the exempt nonexempt distinction more modern. In addition to modernizing the defnitions the DOL raised the salary test to $455 per week. Addi- t iona l ly t he h ig h sa la r y test wa s ra ised to $10 0, 0 0 0. A lso cer ta i n professionals such as teachers do not have any salary test. R e c e nt l y, t he D e p a r t me nt of Labor (DOL) has released proposed rules to update the exemptions from overtime. I f a person is to be considered exempt – they must meet all of the following tests: As of 2016 (date is estimated and s u b j e c t t o c h a n g e a nd p o s s i ble delay) white collar workers would need to f u l f i l l a dut ies test . T he duties test is diferent for each of 3 of the 4 classifcations (executive, administrative, professional). Tis is consistent with the current rules. T he DOL is a lso ask ing for com- ments on possible changes to the duties tests. Second is t he sa la r y level test, which says a salary has to be a cer- tain amount. Currently, that salary is set at $455 a week or an annual salary of a litle over $23,000 a year. For the three classifcations above (executive, administrative, profes- sional) these proposed regulations would raise that to $970 a week, or a $50,440 annual salary. T h e h i g h s a l a r y t e s t w o u l d increase to $122,148. T h e D e p a r t m e n t o f L a b o r i s accepting publ ic com ments unti l September 4, 2 015 . T he DOL is seek ing comments on whether to a l low nond iscret iona r y bonuses, such as certain production or per- formance bonuses, to satisf y a por- t ion of t he s t a nd a rd s a l a r y t e s t requirement. So what's nex t? A f ter the com- ment per iod end s, t he DOL w i l l review all comments. Possible out- comes could be immediate imple- mentation of the new regulations as proposed. More likely will be some rev i sion s w h ich cou ld be i mple- mented but more l i kely a not her com ment per iod, a not her rev iew and then implementation. Keep an eye on the next DOL notice some- time afer September 4, 2015. James Paille CPP is the Director of Operations for Tomson Reuters myPay Solutions. He has been an executive manager in the payroll ser- vice industry for more than 30 years, specializing in managing multi- location ofces. Jim is President-Elect of the American Payroll Association as well as a member of the National Speakers Bureau, and chairs the CPP Certifcation Review Panel. He holds a Bachelor of Science in Account- ing fom St. John Fisher College in Rochester, NY. A Year in the Life of a PAYROLL Accountant is sponsored by SurePayroll and ADP What's Next For Proposed Changes to Overtime Pay and Exempt Employees? By James Paille, CPP T he Fair Labor Standards Act has been around since 1938. Te purpose was to set federal minimum wage (then 25 cents an hour), regulate child labor and set e xem p t ( w h i te co l lar worker s) and nonexempt rules for overtime pay (originally 60 hours). Tere were a few changes such as overtime pay now starts at over 40 hours but generally the rules for overtime for the most part stayed constant until 2004. THE DEPARTMENT OF LABOR IS ACCEPTING PUBLIC COMMENTS UNTIL SEPTEMBER 4, 2015.