The Fair Labor Standards Act (FLSA) requires employers to provide basic rights and wage protections for employees, which includes minimum wage and overtime, such as, time and a half of their regular pay, for any hours worked in excess of 40 hours per work week.
FLSA does exempt overtime pay on so called “white collar” workers, such as administrative, executive and professional workers, if they are paid a salary of at least $455.00 per week, while satisfying other duties. But to qualify for an exempt status, the employee must earn $455.00 per week, which comes out to $23,660.00 per year, which is just barely above the national poverty level for a family of four.
Experts are predicting that the new rules may actually double the salary amount requirements, which means a large amount of employees who make between $23,660.00 and $47,320.00 (or possibly even more) will be subject to overtime pay.
Employers should begin determining which employees this could affect and budget accordingly. Employers should plan that the “white collar” exemption may become more constrictive, for example, the executive exemption duties test could limit the amount of time a manager can engage in the same job duties as their non-exempt direct reports.
Employers should consider updating job classifications of all of its exempt employees with detailed descriptions of the duties performed and the amount of time spent on each duty, and updating their organizational charts to determine the number direct reports of each exempt manager. However, employers must be careful they do not misclassify their employees, or they could face penalties if the Department of Labor does an audit.
Sunni DiNicola is an Associate Attorney at Lardiere McNair, LLC. To read more about Sunni, please visit lmcounsel/sunnis-bio.htm
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