Second, the USDOL scrapped its proposal to update the salary threshold and EAP rules every four years. The increased FLSA threshold will not have much impact in certain states; for example, California, New York, and Alaska already have higher state salary threshold requirements. Although you must be careful, as exemption status is based on the duties of the position and not these specific job titles. Employers may use nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis, to satisfy up to 10 percent of the standard salary level. The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. Under the FLSA, salaried exempt employees must receive a minimum salary of $455 per week, as of the date of publication. Other Laws & Collective Bargaining Agreements. In order to qualify as an exempt employee, the employee in question must meet three criteria: (1) the employee must make at least $35,568 per year, (2) the employee must be paid on a salary basis, and (3) the employee must perform exempt job duties, as defined by the FLSA. $780 per … The FLSA provides minimum standards that may be exceeded, but cannot be waived or reduced. Effective January 1, 2020, the California threshold for employers of 26 or more employees will increase to $54,080 per year (or $1,040 per week). A salary basis means that the employee receives a predetermined salary regardless of the number of hours they work. Effective January 1, 2020, the New York threshold for executive and administrative exempts currently ranges from $885 to $1,125 per week ($46,020 annually to $58,500 annually) depending on siz… The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and. Employers should also be aware that some state minimum wage laws lack an FLSA-identical HCE exemption; so, as a practical effect, the HCE exemption may be unavailable in certain state. When state law differs from the federal FLSA, an employer must comply with the standard most protective to employees. The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. The U.S. Department of Labor (DOL) considered input from public comment and held listening sessions during 2018 as part of the review process. Today, as anticipated, the U.S. Department of Labor (USDOL) published its final rule raising the Fair Labor Standards Act (FLSA) salary threshold for the executive, administrative, and professional (EAP) exemptions to $35,568 per year, or $684 per week, effective January 1, 2020. [CDATA[/* >*/. Employers and employees alike commonly assume that “salary = exempt” and “non-exempt = hourly,” but both assumptions are incorrect. Links to your state labor department can be found at /agencies/whd/contact/local-offices. Under the FLSA regulations, there is a minimum threshold for weekly salary wages. These requirements are outlined in the FLSA Regulations (promulgated by the U.S. Department of Labor). Indeed, there are many ways to compensate non-exempt employees in compliance with the FLSA, as long as the employee receives (1) the minimum wage for all hours worked and (2) the overtime premium, which is due on almost all wages. The table below outlines the revised salary thresholds in New York State: For Nassau, Suffolk, and Westchester Counties, the salary threshold will increase to $1,125.00 per week ($58,500.00 annually) on December 31, 2021. However, the rule makes a number of other important changes . The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and. An agency within the U.S. Department of Labor, 200 Constitution Ave NW This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek. Police, Fire Fighters, Paramedics & Other First Responders. Payment on a salary basis on its own does not render the employee exempt from the overtime requirements of the FLSA. Compensation Requirements. exempt employee salary deductions The Fair Labor Standards Act (FLSA) requires that most covered employees receive overtime pay at time and one-half their regular rate of pay for all hours worked in excess of 40 per week. The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. Consequently, employers currently paying EAP-exempt employees less than $35,568 per year need to increase their salary levels or convert positions to non-exempt status for 2020. In the United States, an exempt employee is an employee that is granted an exemption to both the minimum wage and overtime pay laws of the FLSA because they are either 1) a bona fide executive, 2) an administrative, 3) a professional, 4) an outside sales, and/or 5) a qualified computer employee. FLSA Minimum Wage: The federal minimum wage is $7.25 per hour effective July 24, 2009. 1-866-4-US-WAGE The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight. The final rule includes a provision allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually to satisfy up to 10% of the standard salary threshold. #block-googletagmanagerheader .field { padding-bottom:0 !important; } In addition to raising the minimum salary threshold, the new rule allows employers to use nondiscretionary bonuses and/or incentive payments to make up part of an employee’s salary—up to 10%. Under the FLSA, many employees are considered exempt from the requirement to pay overtime. Exempt employees must be paid on a salary basis and must have exempt job duties. The new rule will be effective Jan. 1, 2020. .manual-search ul.usa-list li {max-width:100%;} Expected hours are divided into the salary amount to arrive at a regular hourly wage, which is used if it is necessary to calculate and pay overtime. Per FLSA law, this salary is not annualized for part-time employees. The following is an example from the regulations: However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. All employees are eligible for overtime pay unless they meet all three of these criteria: They are salaried, not hourly, employees. The minimum salary threshold of the FLSA changes every year, so it’s important to stay current on the regulations for proper employee compensation. The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243). To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $684* per week. Please see this page for more details about the changes to the required minimum salary. An underpublicized feature of the new federal rule is that it formally rescinds the 2016 final rule that, although enjoined, has remained a part of the official rules published by USDOL. Salary-basis test. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies. Teaching positions are exempt under a different FLSA provision and are not subject to the salary threshold. The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below; The employee’s primary duty must consist of: The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or. Attorney Advertising. Any exempt employee who currently earns a weekly salary that is less than $684 per week will be impacted by this new rule. An employer may provide an exempt employee with additional compensation without violating the salary basis requirement if the employment arrangement also includes a guarantee of at least the minimum required salary of $684 per week. An official website of the United States government. Exempt employees are not entitled to overtime pay, according to the FLSA federal law.This means that if the employee works more than a 40-hour workweek, their employer does not need to pay them any overtime pay. The FLSA recordkeeping regulations do not require that the same workweek be adopted for both non-exempt and exempt employees. Effective January 1, 2020, the California threshold for employers of 26 or more employees will increase to $54,080 per year (or $1,040 per week). The core concern of salary reductions involves the FLSA’s “salary basis” test. Employees can also be exempt if they make over $100,000 a year (at least $455 a week as a salary) and regularly meet the criteria in one of the other exemption tests. The United States Department of Labor has provided guidelines for exemption in the FLSA Regulations. Similarly, employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium than provided under the FLSA. The prior salary limit was at least $455/week. This fact sheet provides general information on the exemption from minimum wage and overtime pay provided by Section 13(a)(1) of the FLSA as defined by Regulations, 29 C.F.R. 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