Choosing between Exempt or Non-Exempt status can be confusing – and the rules are changing in 2019. Here’s some information that can help you make those important determinations.
Can I ask you a personal question? Are you Exempt or Non-Exempt? No really, because if you aren’t quite sure what category you fit in, don’t feel alone. The FLSA (Fair Labor Standards Act) sets a standard to pay most employees the minimum wage and overtime for over 40 hours in a workweek. FLSA allows for exempt status for workers who meet a specific criterion that includes executives, highly compensated, professional and outside sales types of jobs. Exempt status does not receive overtime pay for hours worked over 40 hours – with a few exceptions, non-exempt equals no overtime. To learn more about the three standards involved in determining if an employee qualifies as exempt, visit here.
However, the Department of Labor (DOL) FLSA rules are changing. In March 2019, the DOL announced their intention to change the minimum salary requirement from the outdated, behind the inflation rate of $455/week to the improved amount of $679/week (that’s $35,308/year). A few caveats are in that standard – compensation could equal up to 10% from commissions, use of incentive pay and non-discretionary bonuses can count toward the base salary.
Ah, but it’s not all settled quite yet. The public has a 60-day comment period, and then the DOL will move toward a final ruling. Though the movement may be slower rather than speedy, plan to stay tuned and follow these steps if you have employees who may need wage adjustments to meet this change.
How to prepare for the potential change in employment status:
- Determine the exempt or non-exempt status of employees based upon the new proposed rules.
- Determine if it Is the right decision to go with continuing salary or to move to an hourly position and pay for overtime
- Make sure that your state rules have not been changed – you will need to comply with those alterations as well.
- Don’t make a change immediately; the Department of Labor hasn’t moved too rapidly in the past; you have time to plan and adjust.
To stay up to date and learn more about this change, please visit these sites for the latest news: