Catch Up on the FLSA Overtime Rules
Beginning December 1, the new FLSA salary level updates and overtime protections take effect. This new rule will make approximately 4.2 million currently exempt workers eligible for overtime pay.
When an employee is exempt, it means they are not eligible for overtime pay if they work more than 40 hours per week. The white-collar workers typically in this category earn salaries well above the minimum wage and enjoy other privileges, such as greater fringe benefits, job security and opportunities for advancement, states the Department of Labor rule.
This exempt status is determined by three things: Pay level, how they’re paid and their job duties. The existing pay level criteria hasn’t been adjusted since 2004. The Department of Labor will now double that existing salary threshold from the old $23,660 up to $47,476. And upward adjustments will continue to be made every three years, with the next change happening in January 2020.
Employers must comply with this initial adjustment by December 1.
Workers who don’t earn under $47,476 must now be paid overtime.
Now, let’s take a closer look at the three criteria workers must meet to be Exempt:
- Be paid a minimum of $47,476 ($913 per week)
- Be paid on a salary basis. (This means pay is not subject to variations in the quality or quantity of work) Note: There is a now a 10 percent allowance for bonuses, incentives or commissions if paid at least quarterly.
- Perform exempt executive, administrative or professional job duties
Note: An employee who meets the salary dollar level and also the salary basis test is exempt only if he or she performs exempt job duties.
This third category, the actual job tasks, must be carefully evaluated to make the “exempt” determination. The job responsibilities that make a job exempt must include: Supervising two or more employees, serve in a management role and provide input into the job status (hiring, promoting, firing, etc.) of other employees.
Traditional “learned professions” are exempt as well.
- This would include: Lawyers, doctors, dentists, teachers, architects and clergy
- Also included are degreed registered nurses, accountants, engineers, actuaries, scientists, pharmacists, and other employees who perform work requiring “advanced knowledge,” according to flsa.com.
“Creative professional” jobs are also sometimes exempt.
- This category includes: Actors, musicians, composers, writers, cartoonists and some journalists
- If the job requires a unique interpretation or analysis—invention, imagination, originality or talent—it’s exempt.
Some “administrative” jobs are also exempt. This one gets a little tricky and should include the following duties to be considered exempt:
- Matters of significance
- The need to exercise independent judgment and discretion
- Office or nonmanual work
- Be directly related to employer’s management or general business operations
FLSA overtime rules don’t outline rights for exempt employees. Exempt employees may still be required to “punch a clock.” They may still need to keep regular office hours, with little or no flexibility, if that’s what an employer requires. These FLSA rules don’t limit the amount of overtime expected from an exempt employee. These are matters of employer and employee agreement. Of note: Workers earning between $47,476 and $134,004 (those under the highly compensated employee category) must still be paid overtime if their job duties don’t meet exemption criteria.