by Jacqueline McClure, Genesis Background Screening Services
The Fair Labor Standards Act (FLSA) Final Rule addresses and defines the regulations for determining the status of your employees as exempt or non-exempt and updates regulations for overtime. Employees are exempt only if they are employed in a genuine executive, professional, or administrative position as those terms have been defined in the Department of Labor’s regulations at 29 CFR part 541. This is referred to as the “white collar” or “EAP” exemption.
To qualify as exempt, a white-collar employee generally must:
- Be salaried – a predetermined and fixed salary that is not subject to reduction based on variations in quality or quantity of work.
- Be paid more than the minimum required salary level for salaried employees*
- Have duties that are primarily executive, administrative, or professional as defined in the Department of Labor’s regulations
In other words, an employee is not salaried and exempt from overtime just because that is how the employer wants to structure it – the position must meet the criteria. It is not the employer’s option to define what is salaried and what is hourly.
Non-exempt employees (salaried or hourly workers that are eligible for overtime pay) covered by the FLSA must receive pay for hours worked in excess of 40 hours in a workweek at a rate not less than one and one-half of their regular rate of pay.
Employers have options on how to comply with the updated standard salary level for exempt employees:
- Increase your exempt employee’s salary to comply* and keep their exempt status or
- Pay overtime premium of one and a half times the employee’s regular rate of pay for any overtime worked or
- Eliminate/reduce overtime or
- Pay lower rate of salary (don’t go below minimum hourly rate) and use non-discretionary bonuses or commissions that will equal the new minimum salary rate* or
- A combination of these solutions
For more information, visit https://www.dol.gov/whd/overtime/final2016/ .
Stay on top of your company’s HR processes to be sure you are staying compliant with changing regulations. If you have any questions or would like a consultation on HR processes, best hiring practices or background screening, you can call 866 944-0041 ext 101, email firstname.lastname@example.org or visit www.genesisbackgroundscreening.com
*On December 1st of 2016, exempt employees will have a minimum salary of $913 per week (or $47,476.00 per year). Future automatic updates to these thresholds will occur every three years beginning on January 1st, 2020.