FLSA- Helping or Hurting Local Businesses?

Posted by: provided by Erin Pardue, Marketing Manager for Express Employment Professionals on Tuesday, October 11, 2016 at 12:00:00 am

Recently, the federal government updated overtime regulations in an effort to extend overtime pay eligibility to more workers. The new rules update the salary and compensation levels needed for certain “white collar” employees to be classified as exempt, making more employees potentially eligible for overtime pay- which could put your company at risk for noncompliance and affect your bottom line.

This new law goes into effect December 1, 2016 and will affect the way more than 4 million workers in the United States are paid.

Where did the new salary levels come from? The minimum salary level for executive, administrative and professional exempt employees is equal to the 40th percentile of full-time salaried workers in the lowest wage census region of the US. This salary amount will automatically increase every three years.

So, what do you need to know about the updated rule?

  • What the rule says: These new changes to salary standards mean that some of your exempt employees may no longer be exempt and may be eligible for overtime pay.
    •  What it means for you: If your salaried employee does not meet the minimum requirement, you may need to increase their salary or pay them hourly.
  • What the rule says: The biggest change to the new rule is that the minimum salary amount for certain exempt employees (those who don’t receive overtime pay) will double from $23,660 annually to $47,476 annually.
    • What it means for you: Evaluate whether or not the employee is deserving of the higher salary to continue their job. If not, they should be paid hourly and will become non-exempt.

  • What the rule says: Non-discretionary bonuses, incentive payments and commissions can account for up to 10% of the standard salary level of $47,476 annually.
    • What it means for you: If an employee’s salary is consisted of more than 10% incentive money, and they make less than the new minimum salary, you may need to increase their salary or pay them hourly.

How to know if your employee should be exempt? Follow this flow chart provided by Express Employment Professionals International Headquarters.


This information is provided by Erin Pardue, Marketing Manager for Express Employment Professionals. To learn more, visit ExpressIndySouth.com or contact Erin or Mike Heffner (Franchise Owner) at 317-888-5700.

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