Under the federal Fair Labor Standards Act (FLSA), employees must be paid at least the applicable minimum wage for all hours worked. In addition, employees must be paid overtime compensation for any hours worked over 40 during the workweek.
However, an employee who satisfies the requirements under one of the FLSA’s exemptions may be “exempt” from minimum wage and/or overtime compensation requirements. Employees who do satisfy one of the FLSA exemptions are considered “nonexempt” and are entitled to minimum wage and overtime compensation.
The changes effective December 1, 2016 (the “final overtime rule change”) are specific to the FLSA’s “white collar exemptions” The final rule did not change how employers must compensate nonexempt employees. In addition, the final rule’s main change is the more than doubling of the minimum salary threshold required under these exemptions.
Unless an employee currently classified as exempt under one of the white collar exemptions earns an annual salary that meets or exceeds $47,476 ($913/week) on December 1, 2016, the employee must be reclassified as nonexempt.
Despite current efforts to delay the DOL’s final rule on changes to the white collar exemptions, employers should prepare to be in compliance for a December 1 effective date. Actions needed for compliance may include raising salaries of currently exempt employees or paying overtime to employees who will no longer be exempt. Specific actions will depend on a number of factors related to each employer’s workforce.
AssuredPartners NL will continue to monitor these developments and provide updates as necessary.
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