The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping and youth employment standards affecting employees. The FLSA is enforced by the Department of Labor (DOL) Wage and Hour Division. In May 2016, the DOL finalized an update to an overtime regulation that exempts certain "white collar" employees from overtime and minimum wage requirements.
The overtime regulation increases the minimum salary at which employees can qualify for the administrative, executive, professional, and computer "white collar" exemptions from $23,660 to $47,476. The regulation also changes the salary requirements to qualify for the "highly compensated employee" exemption from $100,000 to $134,004. The regulation does not impact the job duty requirements needed to satisfy any of the exemptions. Any employee properly classified under these exemptions is not legally entitled to overtime pay under federal law. The regulation is effective Dec. 1, 2016.
The overtime regulation does not impact employees who are currently properly classified as "non-exempt" (i.e. overtime pay legally required), outside sales employees or independent contractors. All employee salaries, job duties and overtime eligibility status should be reviewed and adjusted, as needed, to comply with the new rule. Additionally, employee salaries and job duties, as well as independent contractor agreements should periodically be reviewed to ensure continued compliance with the FLSA and other applicable federal and state law.
UPDATE: On November 22, 2016, a federal judge put on hold the implementation of the new rules applicable to the White Collar Exemptions under the Fair Labor Standards Act (FLSA). The rules, originally scheduled to go into effect on Dec. 1, 2016, have been indefinitely delayed for employers throughout the United States. The following statement was released by the Independent Insurance Agents & Brokers of America.
“The Big ‘I’ is pleased with U.S. District Court Judge Amos Mazzant’s decision to grant an injunction to stop the U.S. Department of Labor’s (DOL) overtime rule from taking effect pending the outcome of ongoing litigation," said Charles Symington, Big “I” senior vice president of external and government affairs. "Earlier this year, the Big ‘I’ joined more than 55 other business groups, as well as 21 state governments, in filing lawsuits challenging the DOL overtime rule. The rule, should it go into effect, will have a significant impact on many Big ‘I’ agencies and their small business and non-profit clients. As litigation continues, the Big ‘I’—the only insurance trade association to sue the DOL—will continue to use all means necessary to fight this overly burdensome rule.”
Click here to go to the IIABA Overtime Rule resource page (IIABA login required).
Click here for The DOL Overtime Rule & The FLSA: Questions and Answers for Big “I” Members.