Department of Labor Changes to the Fair Labor Standards Act

Department of Labor Changes to the Fair Labor Standards Act

The new Fair Labor Standards Act (FLSA) affects exempt status and overtime pay.  The new rule goes into effect December 1, 2016.

1. The minimum amount for an exempt status employee will increase to $913/week which equates to an annual salary of $47,476. Entities can still pay bi-weekly, semi-monthly or monthly as long as the salary calculates to $913/week.
2. The amount is a weekly salary; which allows the hiring of salaried seasonal employees at the rate of $913/week with payment for the weeks in which they work.
3. The salary minimum is $913/week, even for the employee on a salary is required to work fewer hours than 40 per week.
4. Who must comply with this new rule?
   1. Any business with annual sales of at least $500,000
   2. All government agencies
   3. Employees who have duties that involve interstate commerce
   4. Certain exemptions from FLSA are in place for Motor Carrier Employees

How to make changes to comply with the new FLSA rules:

1. Increase the salary of current exempt employees to meet the $913/week amount
2. Convert employees from salary to hourly
   1. Overtime will be required to be paid on all hours worked over 40 in a week
   2. Only government agencies may allow employees to accumulate comp-time for hours worked over 40 hours in a week at a rate of 1.5 hours
3. Make other changes to pay/benefit structure to allow employees to meet the $913/week at a similar cost to the entity

There are no changes to hourly rate employees, including how overtime is calculate for those employees.

Feel free to contact us at 507-644-6400 with questions regarding if your entity is currently compliant or what you will need to do to become compliant with these new rules.