New FLSA Exemption Requirements

by Christy Monson

From our November 2016 e-newsletter

As you know, your (non-firefighting and non-public safety) regular employees generally must be paid overtime or earn comp time if they work over 40 hours in a workweek–unless they qualify as “exempt” from the Fair Labor Standards Act’s overtime requirements. Recently, the Department of Labor made some very big changes to the rules regarding which employees qualify as exempt. This means you, as an employer, should review the way in which you categorize FLSA-exempt employees.

Specifically, starting on December 1, only salaried employees who make at least $913 per week (or $47,476 Per Year) may be considered exempt. Now, to be classified as a salaried exempt employee under the Fair Labor Standards Act (FLSA), the employee must:

a)     meet the tests for executive, administrative, or professional employees;
b)     be paid on a salary basis; and
c)     starting December 1, 2016, be paid at least $913 per week or $47,476 annually.

What does this mean for you as an employer? Your choices if you have an employee who meets these criteria are:

●     You could increase their salary to at least $47,476 to preserve their exempt status;
●     You could reclassify them as non-exempt and pay them any overtime or credit them with comp time;
●     You could reclassify them as non-exempt and limit their work hours to under 40 per week.

The DOL made other changes to their exempt-status rule regarding how much someone must earn to qualify as “highly compensated” and how to calculate the effect of non-discretionary bonuses on someone’s exempt status. For more information on these recent changes, see:

https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm

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