NEW THRESHOLDS IN EFFECT FOR EMPLOYEES TO BE CONSIDERED EXEMPT FROM MINIMUM WAGE AND OVERTIME REQUIREMENTS UNDER THE FAIR LABOR STANDARDS ACT
As of January 1, 2020, changes to overtime pay regulations under The Fair Labor Standards Act (“FLSA”) went into effect for employees whose pay and job duties qualify under certain criteria.
Under the new regulations, the standard salary level to determine if an employee may be categorized as exempt from minimum wage and overtime requirements has been increased from $455 per week to $684 per week. If an employee is paid less than that amount ($35,568 per year) he/she must be compensated hourly and must receive time and one-half pay for over 40 hours worked in a workweek. Note that employers may use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the standard salary level amount. Additionally, the law provides that highly compensated employees (over $107,432 annually) may also qualify for an exemption.
Under the FLSA, an employee’s salary level is only one component of the exempt or nonexempt status assessment – the “duties test”, or an analysis of job responsibilities, is also required when determining if an employee is exempt or nonexempt. Though the law provides for other types of exemptions, the two exemptions most likely applicable to clients in the construction industry are the “Executive” and “Administrative” exemptions. Under the “Executive” exemption, an employee must (i) manage the work of at least two other full-time employees, (ii) have authority related to hiring, promotion and firing decisions, and (iii) primarily manage the business or a department of the business. To quality for an “Administrative” exemption, the employee must perform office or non-manual work related to business operations with the ability to exercise discretion and independent judgment on matters of significance.
The above is only intended to provide a quick reference to the regulations associated with classification of employees. In all events, a more thorough analysis should be employed to ensure that employees who are classified as exempt from minimum wage and overtime regulations meet all applicable legal requirements.
For more information, please contact Faith Harrison at the Harrison Law Group.