The Fair Labor Standards Act will Cover More Employees Commencing on December 1, 2016

 

By Scott C. Adams | Employment Law Attorney
Published: November 3, 2016

The Fair Labor Standards Act (“FLSA”) was passed to protect workers’ standards of living through the regulation of working conditions. Thus, the FLSA imposes a minimum wage that all covered employees must receive. The FLSA also imposes a “premium” for every hour worked in excess to the statutory standard of a forty (40) hour workweek.

Certain employees are not afforded the protections of the FLSA because they are what is called “exempt.”  One group of “exemptions” is commonly called the “white collar” exemptions. These exemptions loosely encompass the “executive exemption,” “administrative exemption,” and “professional exemption.”

For an employee to fall into one of these exemptions, the following must be present:

  1. the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (“salary basis test”);
  2. the amount of salary paid must meet a minimum specified amount (“salary level test”);
  3. the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”).

For many years to meet the “salary level test” an employee had to be paid $455.00 per week. But on May 18, 2016, President Obama announced the publication of the Department of Labor’s final rule updating these exemptions. The new rule will take effect December 1, 2016. Most significantly, the “salary level test” was increased from $455.00 per week to $913.00 per week. By this increased, it is estimated that the FLSA will automatically extend overtime pay protections to over 4 million employees within the first year of implementation.

Specifically, the Final Rule:

  • Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  • Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  • Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

If you are a salaried employee and you have questions regarding your right to overtime pay you should contact our Orlando overtime pay and minimum wage lawyer at LaBar & Adams, P.A. at 407-835-8968 or fill out our online form located on this page and we will contact you shortly.

 

 

Scott Adams - Employment Lawyer

 

 

 

 

 

Scott C. Adams
Employment Law Attorney