Background: The Fair Labor Standards Act (FLSA) establishes minimum wage and overtime pay standards in the private sector and federal, state and local governments. For most employers, the FLSA requires employees to be paid at least minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a standard workweek. Some employees are exempt from these overtime provisions or both the minimum wage and overtime provisions.
Update: On March 7, 2019, the U.S. Department of Labor (DOL) proposed revisions to the regulations that exempt certain workers from overtime pay. MRA has compiled a list of questions and answers for employers describing what this means:
Q: What does exempt from overtime pay provisions mean?
A: To be considered exempt under the FLSA, an employee must be paid on a salary basis (currently the standard salary threshold for exemption is $455/week or $23,660 for a full-year worker) and must meet certain tests related to their primary job duties. Job titles alone cannot determine exemption status.
The FLSA allows an exemption for individuals employed as executive, administrative, professional, outside sales and certain computer positions.
Q: What are the main proposed changes?
A: The minimum salary that must be paid to an exempt employee will increase from the current $455 per week ($23,660 per year) to an estimated $679 per week ($35,308 per year). Increases are proposed to be reviewed every four years.
The Department also proposes to update the total annual compensation requirement for the “highly compensated employee” test, and to revise the special salary levels for employees in the motion picture industry and certain U.S. territories.
Q: Will there be changes to the “duties” test?
A: No changes to the "duties" tests were proposed.
Q: How long do employers have to submit comments on the proposed rule?
A: There is a 60-day comment period following the date the proposed rule was published in the Federal Register. Written comments must be submitted at www.regulations.gov in the rulemaking docket RIN 1235-AA20.
Q: When will this proposed rule become effective?
A: Proposed rules are not binding. There must be a comment period to allow interested parties to provide feedback. Sometimes, but not always, these comments influence changes to the proposed rule.
It is anticipated that the final rule will not become effective until 2020.
Q: What should employers do now?
A: MRA recommends that employers take the following steps:
- Submit comments and questions to the DOL if you believe that provisions of the proposed rule should be modified or clarified.
- Review current job descriptions to ensure they are up-to-date and accurately reflect the duties performed by employees.
- Review, but don’t make changes to, positions that are currently classified as “exempt,” particularly those with a salary near the current minimum salary threshold of $455 per week.
- Review current collective bargaining agreements, if applicable, for conditions that would change pay or benefits. Employers should be aware that employees that may need to be reclassified as non-exempt under updated regulations may become part of the bargaining unit.
Q: Where can I get more information?
A: Full information about the proposed rule is available here.
As always, MRA is here to assist you. Whether you are looking for additional resources or have questions, call our 24/7 HR Hotline at 866-HR-HOTLINE (866.474.6854) or email at email@example.com.