The Federal Fair Labor Standards Act (FLSA) requires that employers pay all non-exempt employees at a rate of at least one and one half times their regular rate of pay for each hour worked over 40 hours in a workweek. While this may seem straight forward, there are many misconceptions regarding when overtime is to be paid and to which employees. Below is a list of five of the top myths associated with overtime pay. Continue reading
When weather emergencies, like hurricanes or snow storms, occur and your business is affected, are you required to pay your employees? It’s not a simple yes or no answer — rather, the situation and the employees’ exempt or nonexempt status determine who should be paid and for what. Continue reading
In a surprising move, the new overtime rule, scheduled to raise the minimum salary threshold for exempt employees on December 1, 2016, has been blocked by Texas Judge Amos L. Mazzant III just ten days before the scheduled effective date.
After the new rule was announced, 21 states filed a lawsuit against the Department of Labor. The case was consolidated with another lawsuit filed by the U.S. Chamber of Commerce and other business groups which also objected to the new regulation.
Even after the lawsuits were filed and consolidated, it was not expected that a decision would be made prior the December 1st effective date. Many are surprised by the decision made by Judge Mazzant who was appointed by President Obama.
The decision to block the rule, a preliminary injunction, doesn’t completely eliminate the rule, but rather delays the implementation until the court has a chance to further review whether the Department of Labor exceeded its authority by raising the minimum salary threshold for exempt employees too high. There is a chance, especially after president-elect Donald Trump takes office, that the rule could be overhauled or eliminated completely, but employers should prepare for the chance that the rule is implemented in the future.
At this time, and until further notice, the minimum salary for exempt employees will remain at $455 per week instead of changing to the scheduled $913 per week on December 1st.
With the new minimum salary threshold for exempt employees taking place later this year (Read more about that here), employers should concentrate on making sure they are in compliance with the new rules and also confirm that their exempt employees are correctly classified. In addition, employers should make sure they fully understand how exempt employees should be paid.
To help employers with understanding payment of exempt employees, we’re debunking three common myths associated with exempt and salary employees.
Can Employees Be Paid Salary to Avoid Paying Overtime?
This is a common question employers have – and not understanding the rules regarding exempt and non-exempt status, established by the federal Fair Labor Standards Act (FLSA), can land employers in hot water if employees are misclassified.
With the impending changes to the minimum salary threshold for exempt employees (Read more about that here!), this is a great opportunity for employers to review all current exempt and salary employees to make sure they are properly classified.
UPDATE: November 22, 2016 – A federal judge has delayed the new overtime rule. At this time it is not known how long the rule will be delayed or if the new rule will be enforced at all in the future. The minimum salary threshold for exempt employees will remain at $455 per week until further notice.
The Department of Labor (DOL) has issued the much anticipated final rules regarding overtime for salary employees.
Under the Fair Labor Standards Act (FLSA), the minimum pay for exempt employees is currently $455 per week (or $23,660 per year). Under the new rule, effective December 1, 2016, the minimum pay will increase to $913 per week (or $47,476 per year). The salary threshold will automatically be updated every three years, beginning on January 1, 2020, based on average wage growth.
An added provision of the new rule is the ability for employers to include nondiscretionary bonuses and incentive payments, including commissions, up to 10 percent of gross wages, to meet the minimum salary requirements. For example, if an employee is paid $44,000 base salary and receives a bonus of $4,000 per year (less than 10% of their gross annual salary), they could still be considered exempt under the new rule because their total compensation ($48,000) is higher than the new salary threshold.
Salaries are a tough expense for most businesses. You want to hold them down but reining them in too tightly doesn’t always work well. Good employees can often go elsewhere and replacing them can cost your company a bundle.