On December 1, 2016, the salary component of the three most popular exemptions under the overtime requirements of the Fair Labor Standards Act will go from $455  to $913 per week ($47,476 annually).  The immediate impact of this change is that if a company is not paying existing salaried employees at least $47,476 annually, then a whole lot of those salaried and previously exempt employees will now be eligible for overtime.   This includes managers and supervisors that were previously exempt under the professional, executive, or administrative exemptions in the FLSA.

Moreover, the salary component of the executive, professional, and administrative exemptions will be indexed, and will likely go up every three years.  Under the new rules, the salary level will be tied to the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region.  Currently, the lowest-wage Census Region is the South.

Mark Tabakman recently reported that two lawsuits have been filed in the United States District Court for Eastern District of Texas challenging the new rules.  The plaintiffs in the lawsuits are state and local governments, business groups, and chambers of commerce, and challenge the Department of Labor’s authority to raise the salary level under the FLSA exemptions.  Mark projects that the lawsuits will be unsuccessful.  I tend to agree.

As we approach December 1, 2016, employers need to examine those employees in salaried positions.  Just because an employee is paid a salary does not mean that the employee is exempt from overtime.  However, in most cases before an employee can be considered exempt from the overtime requirements, the employee must be paid a salary of at least $913 per week.  If the salary threshold is not met, it does not make any difference what the employee’s duties and responsibilities are.