The Department of Labor has released its long-awaited overhaul of the Exemptions from the FSLA. Currently, the white collar exemptions in 29 CFR Part 541 require employers to pay employees a salary of at least $455 per week ($23,660 annually) and to perform certain exempt duties. The “highly-compensated” exemption currently requires employers to pay a salary of over $100,000 annually. The proposed amendments increase the salary basis test from $455/week to $970/week ($50,440 annually) beginning in 2016. Similarly, the “highly-compensated” exemption under the FLSA has been increased from $100,000 to $125,148 annually, which is tied to the 90th salary percentile.
There are two tests for an employee to be classified as exempt from the Fair Labor Standard Act, Salary, and Duties. Salary test requires the employee to be paid a minimum weekly salary regardless of the hours worked. The duties test requires the employee to perform certain duties to be considered exempt. In California, the employee has to perform exempt level duties 51% of the time.
What does it all mean for employers?
Review and update your job descriptions to ensure positions are classified correctly.
Review the salary to ensure it meets the minimum.
Review the hours worked by each position.