There’s a new sheriff in town…known as the updated Fair Labor Standards Act (FLSA) of 2020. The minimum salary for exempt employees will officially be raised to a minimum of $684 per week or $35,568 per year effective January 1st. FLSA regulations are complicated. There are many other angles to examine when evaluating FLSA status and the implications of errors are ugly. Here’s what you need to know right now:
1. Minimum pay for employees classified as ‘Exempt’ is changing.
It is increasing from a minimum of $455 per week or $23,600 annually in 2019 to $684 per week or $35,568 annually on January 1st, 2020. Exempt employees do not qualify for overtime pay; so, if you have exempt employees who are earning less than $35,568, you’ll either need to raise their pay to the new minimum or review, and potentially update, their job responsibilities and change their classification to Non-Exempt.
2. Reviewing job duties is a ‘Best Practice’ that should go along with evaluating salary and FLSA status.
Talk to your employees to find out what they are actually doing and how that compares to what is listed in their formal job description. These two things don’t always align and FLSA rules consider both factors when determining if classifications are correct.
3. The minimum salary for Exempt employees is not the only thing changing.
The threshold has also gone up for Highly Compensated Employees (HCE) who meet the HCE salary test to be classified as exempt. The new threshold is $107,432. In addition, there are expected to be changes to what is included when calculating salary for exempt employees. Employers will now reportedly be able to consider bonuses and incentive payments in some situations.
FLSA laws are notoriously confusing and leave room for interpretation—and there can be fines involved for improper classifications. If you don’t understand it, don’t worry. Just give us a call or reach out to us via the online chat tool in the lower left corner of your screen. We love helping companies grow and align their people with their business strategies, and we love to share what we know.