New FSLA White Collar Exemptions Announced

In May, the Department of Labor made changes to the Fair Labor Standards Act, adjusting the “white collar exemptions” for minimum wage and overtime. It’s important for employers to be aware of these changes and follow them to ensure that they are not violating any labor laws.

The new exemptions are designed to extend overtime protections to more than 4 million workers the first year they’re implemented. These protections go into effect on December 1, 2016, so your company has some time to learn the new rules and ensure compliance.

Here’s what you need to do to protect yourself and offer your employees fair compensation for their time.

First of all, the new exemptions provide clarity and illustrate whether or not employees meet the minimum wage threshold for overtime pay. They apply to salaried Executive, Administrative, and Professional employees who may be asked to work more than 40 hours per week.

The new white collar exemptions dictate that employees who earn less than $47.476 per year (or $913/week) must be compensated for working overtime. This new figure is based on cost of living increases since the last exemptions were created and uses wages in the lowest earning area of the United States for its calculations.

Employers may include bonuses, commissions, and incentive payments when calculating an employee’s salary. The salary may include up to 10% in non-discretionary bonuses, commissions, and incentive payments if those payments are made on a quarterly basis or more frequently.

The Highly Compensated Employees (HCE) level has also been recalculated. Employees earning more than $134,000/year will almost always been exempt from any sort of overtime compensation.

In addition, and in order to keep pace with increasing salaries, the threshold for white collar exemptions will increase every three years beginning on January 1, 2020. Employers will have at least 150 days’ notice to view the new wage threshold.

Ultimately, the white collar exemptions are designed to ensure better employee morale, health and productivity by providing improvements to the work-life balance. They will also offer more employees the opportunity to work by limiting an employer’s desire to use of overtime.

If these changes leave you feeling confused, we can help. SourceOne Payroll offers full service payroll and human resources solutions for businesses like yours. Get in touch with us today to learn more about how we can make things easier for you!

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