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More Workers' Eligible for Overtime Pay

The federal Fair Labor Standards Act (FLSA) requires that all workers (with some exceptions) receive at least a minimum wage for every hour they work, as well as overtime pay at one and a half times their regular rate of pay for hours they work beyond 40 in a workweek.­ This applies to both hourly and salaried workers.­

Please note:­ It is a common misconception that employees who are paid on a salary basis are exempt from overtime; this is not true.­ Employees paid a salary must be paid a certain minimum amount and must have job duties that meet specific criteria to be exempt from overtime.­

There are some exceptions to the minimum wage and overtime requirements for certain employees, if their jobs meet specific criteria.­ There are 5 categories of employees who do not have to be paid overtime:­ executive, administrative, professional, outside sales and certain computer-related occupations.­ These are known as the “white collar” exemptions because employees must be paid a certain salary amount and have specific job duties to qualify, like management of other employees or specialized skills that require advance schooling.­

To qualify for one of these exemptions (and thus not receive overtime pay), employees must meet certain tests regarding their job duties and be paid a certain minimum salary.­ (One side note: the outside sales exemption does not require a minimum salary amount, so those employees are not affected by this change.)

Currently, the minimum salary amount to qualify for an overtime exemption is $23,660.­ Starting December1, 2016, the minimum salary to qualify for an overtime exemption will increase to $47,476.­ This means that salaried employees whose salary is less than $47,476 a year (or $913 a week) cannot be exempt regardless of their job duties and must be paid overtime for all hours over 40 they work in a given workweek.­

To prevent the salary level from becoming “outdated,” it will be updated automatically every 3 years.­ The first update will take place on January 1, 2020, with future updates occurring every 3 years after.­

This change will entitle many workers making more than the current threshold of $23,660 to overtime pay and will be a big change for small businesses.­

>>Click here to download more information explaining this change as well as the “duties test” that employees must meet to qualify for each exemption.<<­

If you have any questions about how this change will affect your business, please call our offices at 844-242-LSBA (5722) and ask for Lance or Erin.

Published: 11/03/2016

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