FLSA & Proposed Overtime Rules

April 11, 2016

FLSA & Proposed Overtime Rules:

What you Need to Do to Prepare

The Department of Labor (DOL) has issued proposed changes that would substantially increase the minimum salary requirement for certain exemptions under the Fair Labor Standards Act (FLSA).

Background

The FLSA requires virtually all employers to pay most employees at lease the federal minimum wage for each hour worked, as well as overtime time pay for all hours worked in excess of 40 in a workweek. The FLSA allows for exemptions from these overtime and minimum wage requirements for certain employees who work in administrative, professional, executive, highly compensated, outside sales, and computer professional jobs. These employees are known as “exempt” employees. To be considered “exempt,” these employees must generally satisfy three tests that focus on how the employee is paid and the type of job duties the employee performs:

 

1. Salary-level test

Currently, employers must pay employees at least $455 per week (the minimum salary requirement) to qualify for the executive, administrative, and professional employee exemptions.

2. Salary-basis test

With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.

3. Duties test

The employee’s primary duties must meet certain criteria.

 

There is also an exemption for “highly compensated” employees. These employees are exempt from the FLSA’s overtime requirements if they customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative, or professional employee and earn at least $100,000 per year.

Note: Most employees are not considered “exempt” from the FLSA’s minimum wage and overtime requirements and are classified as “non-exempt.” Employers must pay “non-exempt” employees at least the minimum wage for each hour worked as well as overtime pay for all hours worked in excess of 40 in a workweek. Keep in mind your state may have minimum wage and overtime requirements beyond what is required by the FLSA.

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