The Department of Labor’s revised regulations concerning the required salary needed to qualify for certain overtime exemptions, pursuant to the Fair Labor Standards Act (“FLSA”), were approved today. Effective December 1, 2016, to qualify for the administrative, executive, and/or professional exemptions, in addition to meeting the job duties requirements, the employee will also have to earn an annual salary of $47,476.00 a year (or $913.00 a week for 52 weeks).
Currently, the salary requirement is only $23,660.00 a year (or $455.00 a week). The new regulations do permit an employer to use bonuses and commissions (up to ten percent of the employee’s total compensation) to count towards the new minimum salary requirements.
Thus, administrative, executive and professional employees who earn less than $47,476.00 a year, effective December 1, 2016 will not be exempt from the FLSA and will be entitled to time and a half for hours worked over forty hours in a week. This includes managers who supervise the equivalent of two or more employees, accounting professionals, human resource professionals, etc.
It should be noted that New York State currently requires a salary of $675.00 a week for employees subject to the administrative and executive exemptions to be exempt from overtime.
While that has not changed, effective December 1, 2016 employees must earn at least $913.00 a week (for 52 weeks) to remain exempt pursuant to the FLSA.
The new regulations also increase the minimum amount to qualify as a highly compensated employee from $100,000.00 a year to $134,004.00 a year. Further, the new regulations have created a cost of living formula whereby every three years the base salary to qualify for the exemptions will be adjusted.
Employers should review their pay practices to ensure they will be in compliance with these new regulations effective December, 1, 2016. Employers will have to make certain decisions relating to employees who no longer qualify for the overtime exemptions as professionals, executive, and/or administrative employees, because they do not meet the new salary requirements. Employers can raise the salary of such employees to ensure the new salary requirements are met. Otherwise, employers must take steps to track and monitor such employees’ hours and to ensure that time records show such employees are not working more than forty hours a week. Otherwise, such employees must be paid overtime if their hours exceed forty hours a week.
More information can be found at the United States Department of Labor website at:
“New Salary Requirements For Fair Labor Standards Act Exemptions Instituted” was written by Joshua A. Marcus. If you have additional questions as to how the new regulations affect your company, do not hesitate to contact one of the attorneys at our firm.