FLSA Adjusted Exemption Rule

Employers have a general concept of the exemption to overtime pay for salaried employees. That general concept has to be revisited before December 1, 2016, when the threshold for exemption for overtime pay under the Fair Labor Standards Act changes.

The FLSA states bona fide professional employees are exempt from overtime pay if they meet 3 criteria. All 3 criteria must be met to qualify for the exemption. The criteria are;

1. Payment on a salary basis (no reductions for poor work, amount of work done, etc.);
2. Minimum salary level must be paid; and
3. The employees duties must be in line with those considered executive or professional.

The change effective December 1st is that the minimum salary paid to an employee to satisfy Criteria 2 (minimum salary) is increasing from $23,660 to $47,476 per year. This change is certainly not the only provision employers must note, but for the great majority of small to medium size business owners this is the most notable change.

Employment litigation can be horrific for an employer. Unfortunately for employers, the facts upon which an employment litigation will be based are happening right now. Don't wait for litigation, actively review your employees' situation now to avoid litigation later.