As you know, the Fair Labor Standards Act establishes two types of employees – exempt and non-exempt. Traditional “exempt” employees have “white collar” job duties. These are your executive, professional and administrative folks. These guys are not out performing manual labor, punching a clock or working on a line. Also – they have to be paid at least $23,660 per year ($455 per week), regardless of the number of hours they work each week.
Traditional “non-exempt” employees are basically . . . well – everyone else. “Non-exempt” folks must be paid at least the minimum wage, as well as an overtime rate for all time worked in excess of 40 hours in a single work week. Generally, OT is calculated at not less than time and one-half of a “non-exempt” employee’s standard hourly rate.
However, the foregoing is all about to change. Maybe.
Specifically, the DOL wants to increase the salary requirements for exempt employees, using the 40th percentile of weekly earnings of full-time salaried workers as a benchmark. If this proposal became law over the next six weeks, in 2016, the estimated salary requirements would be $970 a week, or $50,440 a year. Yikes.
So is this law yet? No. Is there a realistic possibility these regulations – as currently constructed – will become law? Probably not to the letter. But it won’t be surprising if the final regulations look a lot like what’s being discussed. Bottom line – the minimum salary level for exempt employees is going up. By a lot. Soon.
The solution is obvious. Just pay everyone about $500K a year. The DOL won’t bat an eye. I’m sure you can shoehorn that into your 2016 payroll . . .
November 20, 2015