This article is the second in a three-part mini-series about the new Department of Labor (“DOL”) regulations under the Fair Labor Standards Act (“FLSA”) that were scheduled to take effect December 1. Part 1 is an overview and review of the DOL rules with regard to exempt v. non-exempt employees, Part 2 highlights four changes taking place and essential facts, and Part 3 summarizes four options you have to ensure you comply with the new rules without negatively impacting your business.
On November 22, a federal court in Texas issued a nationwide preliminary injunction that will at least temporarily halt the implementation of the new rule; however, employers should be aware of and plan for the new rules in case they take effect soon.
Unless an employee is “exempt” under the DOL regulations, then – generally – he/she must be paid overtime at the rate of 1.5x their normal hourly rate for all time worked greater than 40 hours in a workweek. This is true even if the employee is paid a salary. Employers typically prefer their employees be exempt, because paying for overtime can be very expensive. The new rules are designed to fully implement the FLSA overtime protections and to simplify the identification of overtime-exempt employees.
- For the salary level test, the new rule raises the salary level from the previous amount of $455 per week, to $913 per week (the equivalent of $47,476 per year). Salaried white collar employees paid below this higher salary level are generally entitled to overtime pay, while employees paid at or above this new salary level may be exempt from overtime pay.
- The salary level test is not a minimum wage requirement; however, if the employer is not paying the salary specified in the new regulations, then the employee is likely entitled to receive overtime pay for all time worked greater than 40 hours in a work week.
- The rule raises the compensation level for highly compensated employees subject to a minimal “duties” test from $100,000 to $134,004 annually.
- With regard to analyzing the “duties” test for executive, administrative, and professional employees, nothing has changed; remember that job titles never determine exempt status under the FLSA.
- Receipt of a salary does not mean that an employee is exempt – salaried employees may still be entitled to overtime pay, depending on their core job duties.
Joe received his law degree from the University of North Carolina–Chapel Hill School of Law and his Accounting degree from the University of Rhode Island. He is admitted to practice law in Connecticut, Massachusetts, and Rhode Island, and he is a CPA. He is an Adjunct Professor and lecturer at the University level and has been a frequent speaker on business planning and legal matters.
Latest posts by Joe Fournier (see all)
- Estate Planning FAQs, part 4 – (choosing fiduciaries) - October 12, 2017
- Business Succession Planning: Four Considerations - October 10, 2017
- Estate Planning FAQs, part 3 – Living Trusts. - September 28, 2017