The FLSA Game is Headed to Overtime!

In what seems like a game that just doesn’t end, we’re back for another round of FLSA action to determine which employees are eligible to be qualified as exempt and which ones are not. As a refresher, here’s what has played out so far:

Back in 2016, we had lots of discussions about the proposed changes to determining who was eligible to be an exempt employee. At the time, a play was made to hoist the minimum compensation level for exempt employees from $23,660 to $47,476. That threshold caused a lot of angst on behalf of employers who were concerned about the financial impact of moving all exempt employees to a $47,476 minimum salary, or reclassifying them as non-exempt and paying them overtime.  After a significant amount of backlash, a legal challenge, and a new administration, the proposal was blocked and has been under review by the Department of Labor since. See Blocked and Probably Tackled. 

On March 7th, the Department of Labor issued a revised rule raising the minimum salary threshold to $35,308 per year for exempt employees. This change is significantly more reasonable and is likely to be enacted. There will be a comment period with a lot of Monday morning quarterbacking where the public is invited to submit comments to the DOL. After a review of these comments, officials will determine whether the new rule should be put in place. Estimates are that it would be effective in early 2020.

What does this mean for the fans? If you have salaried exempt employees earning less than $35,308 per year, you should be planning to either increase the salaries, or reclassify these employees as non-exempt and prepare a process for paying them overtime.

Finally, don’t forget that salary is only one component of determining exempt level status. Exempt employees will still need to meet the duties test.

Have questions about whether your employees are properly classified? Let us know. We’re ready to tackle your FLSA challenges!