At the end of the movie “Nashville,” a country singer wails a ballad called “It Don’t Worry Me.” I submit the same could be said for the possible changes to white collar exemption regulations.

In recent days, the wage hour blogs have been buzzing about the proposed changes to the FLSA white collar exemption tests. Any time the regulations are revised (i.e. 2004) the burden becomes heavier for employers to prove the exemption, but there may be a hidden benefit for the business community. By making the lines of demarcation clearer, the regulations may well make it easier for employers to make appropriate, i.e. defensible, classification decisions.

The Obama Administration is going to direct the Department of Labor to toughen up the exceptions to federal overtime requirements through regulation. This could be by raising the salary threshold, currently $455 per week and/or augmenting the existing or establishing new elements of exempt status.

On the issue of salary, I have always thought the $455 per week was too low, especially if the employee(s) performed subordinate duties, which injected the issue of the primary duty test into the equation. In that context, to me, the low salary, coupled with the significant amount of non-exempt work, almost suggested a non-exempt finding by an agency or court. Higher salary thresholds already exist, e.g. New York ($640) and California (600), which I believe should be the “basement” for exempt employee salaries, to show that there is a bright line between manager and subordinate.

If the proposed regulations seek to set a fixed percentage of an employee’s work that has to be devoted to managerial tasks, like California, (more than 50% of an exempt employee’s time has to be devoted to exempt work), after some short-lived spikes in labor costs, employers would respond. They would lower salaries (of those who earned more than $455 per week) and either build in the overtime to the salary or place the employees on a fluctuating work week arrangement. Or, the employer could simply put those lower-level supervisory or administrative employees on hourly rates and pay overtime or, perhaps more easily, limit work time to no more than forty hours per week to avoid triggering overtime requirements.

I think the new guidance, if and when it comes, may initially bode well for plaintiff lawyers, but will give employers a clearer view of how employees should be classified.

To be coninued…