New Minimum Threshold for Exempt Employee effective December 1, 2016

The US Department of Labor issued new regulations under the Fair Labor Standard Act. As a result of these regulations, on December 1, 2016 the minimum salary threshold for exempt employees will increase from $23,660 to $47,476 per year. Under the previous threshold, the minimum weekly salary for an employee exempt from overtime was $455. The new regulation increases this amount to $913 per week. Under the new regulations. the threshold will be indexed every three years.

What does this mean for employers? Any changes to wages or salaries must take effect on December 1, 2016. Employers need to evaluate each salaried position and ascertain whether the employee’s salary meets the new threshold. If it does not, the employer needs to evaluate the position to determine whether it should be reclassified as a non exempt position and changed to an hourly wage subject to overtime. If the position is properly classified as exempt, the employer will need to increase the employee’s salary under the new regulations. The duties test for determining exemption from overtime did not change under the new regulation.

Please contact our office if you have any questions about how this regulation may affect your business.