New Rules On Overtime Eligibility
Employees formerly exempt from the FLSA’s overtime pay requirements may become non-exempt after new regulations become effective later this year. The new regulations were drafted in an effort to increase the number of employees eligible for mandatory time-and-a half overtime pay.
Just as before, under the new rules, an Executive, Administrative, or Professional employee must satisfy three requirements to be exempt from overtime pay:
For standard Executive, Administrative, and Professional employees: (1) the employee must be paid a predetermined and fixed salary (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“standard salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”).
For Highly Compensated Employees: (1) the employee must be paid a predetermined and fixed salary (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“highly compensated salary level test”); and (3) the employee must customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee (“minimal duties test”).
The salary level test for Executive, Administrative, and Professional employees will be raised from $455 per week to $913 per week (or from $23,660 to $47,476 annually). The highly compensated salary level test will be raised from $100,000 to $134,004 annually.
Just as before, even if an employee is paid a fixed salary the employee still may qualify for overtime. The new regulations make no changes to the two duties tests.
While several options are available to adapt to the new regulations, several alternatives may require giving employees 30 days prior notice. The new regulations will become effective on December 1, 2016. Employers that run afoul of the FLSA’s overtime requirements may be subjected to claims of unpaid overtime and penalties.
Our employment group is here to help. If you have questions about the new FLSA regulations, please contact Marty Jackson.