As of December 1st, 2016 the Department of Labor (DOL) has increased the minimum salary requirements for exempt administrative, professional, and executive employees.
These exempt employees are immune from the The Fair Labor Standards Act (FLSA), which explicitly states that employers MUST pay their employees at least the minimum wage amount (which varies by state and municipality) for all hours worked. Employers must also must pay overtime to employees at approximately one-and-a-half times their regular rate of pay when their workweek extends above and beyond 40 hours.
There are a few criteria an employee must meet before they can be classified as “exempt,” and, as a result, free from the FLSA rules and regulations in relation to overtime pay and minimum wage. The criteria for exempt employees are:
- All employees must meet minimum salary requirement ($913/week). Employees who earn more than $100,000 are almost always exempt.
- The employer must pay the employee a fixed salary in any week they work, regardless of the quality or quantity of the work performed.
- The Employee’s primary duties meet certain criteria under the FLSA.
With the new rule in effect, the minimum salary requirement for administrative, professional, and executive exempt employees will now rise to $913 per week (or $47,476 per year). This has increased from the previous $455 per week (or $23,660 per year).
What does this mean for employers?
All employers now must pay their exempt employees who meet the administrative, professional, and executive exemption criteria a minimum of $913 a week. This is the ABSOLUTE MINIMUM amount employers are allowed to pay their exempt employees.
Additionally, it is important to note that the Department of Labor adjusts the minimum salary requirements every three years. The first minimum salary adjustment is planned for January 1, 2020. The DOL will usually publish a notice at least 150 days before any changes take effect so that you as an employer or employee are well-informed and up to date on newest labor laws.
As an employer, what should you be doing?
Make sure that your exempt employees meet their exemptions test (see the salary and job duties requirements mentioned above). If your employees are in fact exempt and are making less than $913 a week, you as the employer are expected to raise their salaries to meet the new requirement, or reclassify said employees as non-exempt, which means you will pay them overtime when/if they work more than 40 hours in a week.
Still have questions or concerns regarding overtime rules? Get in touch with Paragon Accountants. We’ll make sure you’re doing everything up to DOL standards!
