Legal Alert: The Department of Labor Is Ready for Salary Changes in December – Are You?
Effective December 1, 2016, the minimum weekly salary necessary for an employee to be exempt from overtime under the “white collar” executive, administrative and professional exemptions more than doubles, from $455 ($23,660 annually) to $913 ($47,476 annually). Basically, if you have any employees that you believe are exempt from overtime based on the executive, administrative or professional exemptions, you need to ensure that they start receiving a weekly salary of at least $913 on December 1. In addition to these changes, the total annual compensation threshold for the highly compensated employee exemption has been increased from $100,000 to $134,004.
If you do not raise the compensation of potentially affected employees effective December 1, you will need to reclassify them as non-exempt, require them to track their hours, and compensate them at time-and-a-half for all hours worked over forty (40) in a week.
The U.S. Department of Labor estimates that these changes will extend the right to overtime pay to 4.2 million workers who are currently exempt. Considering that there were a record 8,781 FLSA lawsuits filed nationwide last year, we are expecting that number to increase due to these changes.
The good news is that there are still more than three (3) months for you to review your compensation policies and procedures, employee classifications, and job descriptions to make sure that you are protected. Of course, we can assist you in this process to ensure that you are prepared to weather this storm effective December 1.
The attorneys in our Firm’s labor and employment practice have experience not only defending employers in FLSA lawsuits, but also in helping employers minimize their exposure before litigation. This includes conducting audits of policies and procedures to ensure that employees are properly classified; drafting job descriptions that support a finding of exempt status and policies that prohibit improper deductions from pay; training managers and supervisors on best practices for avoiding liability under the FLSA; and providing day-to-day advice to Human Resources, in-house legal, and other managers to implement those best practices.