New White-collar Overtime Rule
FLSA Exempt Rule
To be exempt from overtime employees classified as executive, administrative, professional or highly compensated under the FLSA, must be 1) paid a salary that meets the threshold and 2) meet the duties test. The threshold changes are limited to these white-collar exemptions. No change has been made to the various other exemptions (for example, outside sales) that do not specifically include a salary requirement even if the employee happens to earn a salary.
Besides $684 per week salary threshold, the new rule raises the so-called highly compensated worker threshold from $100,000 to $107,432. The highly compensated employee exemption covers well-paid workers who perform some managerial duties. Employees designated as highly compensated face less stringent requirements for being exempt from overtime pay.
In addition to the salary threshold change, employers will be allowed to use non-discretionary bonuses and incentive payments (that are paid at least annually) to satisfy up to 10% of the standard salary level.
Employers Should Prepare
To prepare, employers should review salaries of all affected exempt positions to determine if any adjustments will be necessary to stay in compliance. Employers can either increase employee’s pay to meet the salary test or re-classify the employee as non-exempt. Newly re-classified employees will be eligible to receive overtime pay if they work more than 40 hours in a work week.
Latest Blogs from Spirit HR
According to Forbes, 32.6 million Americans will be working remotely by 2025. In addition to enjoying significantly lower overhead, employers are now in a prime position to widen their talent pool and leverage a more robust, productive and collaborative workforce by...
Onboarding is an essential aspect of preparing new employees for success. A good onboarding process can make the difference between an employee who will work with your company for less than a year and one who not only stays with the company but is actively motivated...
In recent years, diversity and inclusion (D&I) has become a central focus for leaders across all industries. Diversity in a professional sense refers to the variety of backgrounds, experiences and perspectives that employees bring to the workplace. Inclusion is...