As a reminder..
Effective December 1, 2016, exempt employees will need to be compensated at $47,476 annually which is equal to $913 per week (in addition to meeting the FLSA’s “Exempt Duties” Test). This 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).
How is this expected to affect employers?
- Any exempt employee who is earning less than the new minimum exempt salary range of $47,476 annually will either need to receive a salary increase to at least the new minimum exempt salary requirement or have their status changed to non-exempt (and be eligible for overtime pay if working more than 40 hours in any given work week). More than 5 million workers are expected to be effected by this change.
- The current “highly compensated employee” exemption will increase from $100,000 to $134,004 per year which is the 90th percentile of full-timed salaried employees nationally.
- A mechanism for automatically updating the salary and compensation levels every three years has been established to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.
WHAT TO DO NOW?
- Employers need to review the salary of each of their exempt employees and decide whether those employees will receive an increase to $47,476 or be reclassified to a non-exempt status.
NOTE: Non-exempt employees need to earn at least minimum wage in the State in which they work and be informed of the organization’s overtime policy(ies).
- Employers need to discuss this change with the employee(s) and how this may affect them (bonus eligibility, changes in vacation/PTO time, etc.).
NOTE: If an employee’s status is being changed to non-exempt, the employee needs to be informed of his/her eligibility for overtime compensation.
Any questions, please contact Lauren Brenner at 617-614-1271 or firstname.lastname@example.org