Department of Labor’s New Rules Take Effect Very Soon
The two lawsuits filed in Texas federal court to enjoin implementation of the Department of Labor’s new salary requirements for exempt employees have not yet been decided. This means that the effective date of these new salary requirements is just around the corner. Are you ready?
Effective December 1, 2016, under the federal Fair Labor Standards Act (FLSA) all exempt employees must receive a weekly minimum salary of $913 a week, for an annualized salary of $47,476 for a full year of employment. Employers may pay up to 10 percent of the required weekly salary as a commission, non-discretionary bonus or incentives. However, employers must pay these amounts no less often than quarterly and on the first paycheck after the close of each quarter.
In addition to the required new minimum salary, to be classified and paid as “exempt,” an employee must in fact perform “exempt” duties, the most common of which are the white collar exemptions. These requirements have not changed and include the familiar categories of executives, administrative, learned or creative professionals, and computer professionals.
The annual required threshold for the FLSA’s “highly compensated” employee exemption goes to $134,004 on December 1 from the current $100,000.
Any employee who does not meet both requirements for white collar exempt status – exempt job duties and a weekly salary minimum of $913 – or satisfy another recognized exemption as of December 1 must be paid as a “non-exempt” employee. Non-exempt employees must receive no less than minimum wage for all hours worked. Currently Minnesota’s minimum wage of $9.50, exclusive of tips, applies to most non-exempt employees. Non-exempt employees also must keep a daily time record of all hours worked and must receive overtime pay for all time worked over 40 in a workweek. Employers generally pay non-exempt employees by the hour, but paying a salary is also an approved method so long as each employee keeps a record of all time worked on a daily basis and overtime is paid correctly.
We encourage employers who have not already done so to review their exempt/non-exempt classifications for legal compliance and to develop both an action and communication plan for implementing any needed changes. Please contact any Fredrikson & Byron Employment & Labor attorney with questions or for assistance in this process.
For more information, see also our “Department of Labor Issues New Overtime Rules” article from May 20, 2016.