On December 1, 2016, the laws regarding overtime wages are changing – dramatically. The United States Department of Labor has issued new regulations on how much certain employees must earn in order to be considered exempt from overtime under the Fair Labor Standards Act (“FLSA”). Generally, employers will now be required to pay overtime wages (time and a half) for most employees who earn a salary of less than $913 per week or $47,476 per year (this is up from $455 per week / $23,660 per year), even if the employee is acting as a manager or supervisor.
Employees earning a salary of between $47,476 and $134,004 may still be eligible to receive overtime, unless they also meet the specific requirements for one of a handful of exemptions, including executive, administrative, professional, sales, and computer positions. The regulations also include a new opportunity for employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10 percent of the salary basis requirement.
Employers who currently have employees in exempt positions who earn less than the new minimum salary will likely need to re-classify the position as non-exempt and pay overtime, or provide the employee with a raise. Employees may not appreciate becoming hourly and being required to track their time, however, after having previously been considered exempt, especially if their new effective hourly rate is decreased to account for overtime. Increasing pay, on the other hand, can be prohibitively expensive for certain small businesses, such as restaurants and retail businesses. In some cases, companies may need to consider eliminating or combining certain positions. The State of Minnesota also has its own Fair Labor Standards Act and Minnesota employers must comply with the requirements of both federal and state law.
Please do not hesitate to contact one of the lawyers at Trepanier MacGillis Battina P.A. to help you with assessing how the new regulations will impact your business.
Minnesota employment law attorney V. John Ella advises clients on wage and hour compliance, employment handbooks, and policies and procedures. John may be reached at 612.455.6237 or firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota business and employment law firm located in Minneapolis, Minnesota.