Update on Changes to Overtime Requirements Under Fair Labor Standards Act

Emily J. Meister

The Fair Labor Standards Act (commonly referred to as the FLSA) applies to most employers throughout our country and, indirectly, their employees.  The FLSA sets the floor or minimum wage that must be paid to employees and dictates when employers are required to pay overtime to their employees.  An exception to such overtime requirement has long existed for administrative employees paid a set salary in excess of $23,600.00 per year. 

In 2016, the Department of Labor announced changes to the minimum salary level, which changes would have raised the threshold to $47,476.00 per year.  Shortly before the changes were to go into effect, however, a nationwide preliminary injunction was entered by the U.S. District Court for the Eastern District of Texas, which injunction has remained in place to date.

Yesterday, the Department of Labor announced a new proposed change to the FLSA’s overtime threshold, which, if ultimately implemented, will raise the threshold instead to $35,308.00 per year or $679.00 per week.  The proposed change has left many employers and employees asking how they will be impacted.

Assuming the proposed change is ultimately implemented, employees making less than $35,308.00 per year will be entitled to overtime compensation and employers for such employees will be required to keep records of hours worked by such employees.  In order to avoid these requirements, some employers may choose to raise the salary for various employees.  Before doing so, however, employers should note that salary alone does not determine whether or not an employee is considered exempt from the FLSA’s overtime and recordkeeping requirements.  Rather, salary is only one half of the test—employees must also perform certain duties or oversight in their normal tasks in order to be considered exempt.

The failure to properly determine an employee’s status and to pay him or her accordingly can significantly impact both the employee and the employer.  From the employee’s perspective, he or she may be missing out on wages to which he or she is entitled and may, forever, lose the ability to recover such damages once the statute of limitations runs (typically after two years).  From the employer’s perspective, courts have the ability to impose fines, to double the damages or wages owed to an improperly paid employee, and to award the employee his or her attorney’s fees.

Thus, for help determining whether you or your employees are exempt and how the proposed rule changes to the FLSA may impact you or your business, consultation with a knowledgeable and experienced employment attorney is highly recommended. The attorneys at Law Firm Carolinascan assist you with employment law related matters such as this.

Corporate Law