Do you Qualify for Overtime? Find out with New FLSA Regulations
The Department of Labor (DOL) recently announced proposed changes to the Fair Labor Standard’s Act’s (FLSA) white collar exemptions. These highly anticipated revisions are fairly significant, and it is estimated that over 5 million (currently exempt) salaried employees will be affected by these changes to the salary guidelines. These are the first changes to these regulations in over a decade.
Former Exemptions Under FLSA
FLSA has always exempted certain executive, administrative and professional employees from minimum wage stipulations and overtime requirements. Currently to be considered exempt you must be:
- paid a predetermined, fixed salary that does not depend on, or cannot be penalized by, quality or quantity of work
- earn more than the current salary threshold of $455 per week or $23,660 annually
- perform executive, administrative, management or professional duties (primarily)
If you fall under the “highly compensated” category of making over $100,000, carry out office or non manual work, and perform at least one exempt duty on a regular basis, you are not eligible for overtime.
What Changes Under the New Regulations
The proposed revisions would alter the minimum salary needed to qualify for exemption from overtime rules, which is expected to be $970 a week or $50,440 annual salary in 2016. The high compensation exemption is expected to go from $100,000 to $122,148. The DOL is suggesting an annual adjustment to these numbers as well. As it stands right now, there are no changes to the duty test but the DOL is seeking comments on whether these should also be amended. If these changes are imposed, clearly, many employees exempt from overtime under the lower salary basis may no longer be exempt.
What Happens Next
The DOL provides the public with 60 days to comment on the proposed rule once it’s published in the Federal Register. There are a number of other areas included in the request for comment such as whether incentive compensation and nondiscretionary bonuses should be used in determining salary. The DOL is also asking the public whether commissions should count as part of nondiscretionary bonuses. The DOL has been clear that it is not including benefit payments, income, food, board, or lodging in the calculation. Also included is a request for feedback on the possibility of updating these numbers annually and the methodology with which to do so.
The deadline for comment is September 4th. New regulations aren’t expected until next year, but when they go into effect, this will likely change things for many employers (a recent estimate by the National Retail Federation says it could cost employers up to $800 million) and employees. Keeping an eye on these new regulations is important to knowing if you are eligible for overtime compensation.
When these regulations go into effect it’s likely many employers will be hesitant to change. However they will be required to do so by law even if it costs them more money in overtime pay.
Have you been wrongly classified as an exempt employee or have you had wages withheld? If you have, you may be a victim of wage theft. Contact Wenzel Fenton Cabassa, P.A. today to talk about your concerns. The initial consultation is free.