The Federal Department of Labor (DOL) has been hard at work for the last few months, preparing (among other things) a major overhaul to the Fair Labor Standards Act (FLSA) minimum wage and overtime regulations.
All of this remains tentative and will certainly be subject to lawsuits once implemented.
Yesterday President Obama previewed one change he would like to see: doubling the minimum salary requirement from the current $455 a week ($23,660 a year), to $970 a week ($50,440).
What does that mean for employers? Many employers rely on the “white collar” exemptions for their managers (the Professional exemption, the Administrative exemption, or the Executive exemption). There is a 2-part test to qualify for these exemptions. The first is that the employee is paid on a “salary basis.” This basically means that the employee receives the same salary every week, regardless of hours worked. This is the part that DOL wants to change — before $455 per week in salary was enough to qualify for the exemption. If the proposal is implemented, you will need to pay your exempt managers at least $970 in salary per week.
But don’t forget about the second part of the test– the “duties” test! Each exemption has its own duties test, and if the employee does not satisfy that component of the test it does not matter that s/he is making over $50k a year, s/he still might be entitled to overtime.
DOL promises more proposed changes to the FLSA overtime regulations