The long-awaited final regulation on the FLSA white collar exemption was released on May 18, 2016. Pursuant to the new regulation, any employee whose salary is less than $47,476 ($913 per week) will no longer be eligible for the exemption, regardless of whether the employee meets the “duties” test for Executive, Administrative or Professional classification. For employees below the threshold, employers will be required to maintain accurate records of hours worked, including travel and remote time and accurate records of rest periods and breaks. Employers will further be required to pay overtime at the rate of 1 ½ times the employee’s hourly rate for all hours worked in a workweek exceeding 40 hours.
Employers have just over 5 months to review their workforce statistics, determine which employees will lose exempt status and make adjustments to comply with the law, either by adjusting the salary upward to meet the minimum, reclassifying the employee as an hourly employee or restructuring the workforce and or business operations.
The salary minimum will be adjusted every 3 years beginning January 1, 2020, thus requiring employers to reanalyze every 3 years to ensure continued compliance. The new regulation does allow a limited percentage of discretionary bonuses, incentive pay and commissions to be aggregated with the salary amount to determine whether the threshold is met.
The regulation is expected to have particularly negative impact on small business and non-profit agencies.
To speak with a Johnstone Adams Labor & Employment attorney regarding how these regulations may affect your business, call Johnstone Adams at (251) 432-7682 or toll-free at (866) 732-3267, or visit our Website.