Minimum Salary for Exempt Employees Doubles
President Obama and the Secretary of Labor announced this morning that effective December 1, 2016, the new minimum salary level for executive, administrative, and professional employee exemptions under the Fair Labor Standards Act (FLSA) will be$913 per week, or $47,476 per year. Although this increase more than doubles the minimum salary level under current regulations ($455 per week), it is less than the $970 weekly figure published in last year’s proposed rule.
Any employer with an exempt employee whose salary is less than $47,476 per year will likely be affected by this new rule. As of December 1, 2016, for any executive, administrative, and professional exempt employee whose salary falls below this threshold, employers will either need to: (i) raise the employee’s salary so he or she may still qualify for the exemption; or (ii) reclassify the employee as non-exempt, and thus be required to pay the employee an overtime premium for any hours worked over 40 in a workweek.
The full text of the Overtime Final Rule is expected to be published in the Federal Register within the next few days. Key provisions on the Overtime Final Rule which have been published by the Department of Labor are available HERE and are copied below. Here is a link to the Department of Labor’s FAQs about the Overtime Final Rule, and here is a link to the Department of Labor’s Overtime Final Rule Fact Sheet.
If you have questions about implementation, training, messaging, or how the Overtime Final Rule applies to you, contact Primmer today.
Update as of 11/22/2017:A federal judge in Texas granted a nationwide preliminary injunction blocking the Department of Labor’s Overtime Rule from taking effect. The court’s decision in State of Nevada v. U.S. Dep’t of Labor is available here. The Overtime Rule was scheduled to take effect on December 1, 2016. The Rule would have doubled the Fair Labor Standard Act’s minimum salary threshold for exempt employees (from $23,660 to $47,476) and included automatic increases to the salary threshold every 3 years.
Practical implications: The Overtime Rule will not take effect on December 1, 2016. The Rule could still be implemented at a later date, pending the court’s decision on a permanent injunction and any decisions on appeal. For now, employers may continue to follow the FLSA’s existing salary thresholds for exempt employees. Given this development, we are available to assist with questions about employee messaging and wage change decisions.