Webinar Recording: Increase to the Minimum Salary for Exempt Employees

July 18, 2016

Originally recorded July 13, 2016

Author(s): Dale A. Hudson, Alicia C. Anderson

The Department of Labor recently issued final Fair Labor Standards Act regulations, which substantially increase the minimum salary an employee must be paid to qualify for most overtime exemptions. Under the new regulations, most employees making less than $47,476 per year ($913 per week) must be treated as non-exempt and are, therefore, eligible for overtime pay. These regulations take effect on December 1, 2016, so employers should be aware of these new requirements now and prepare to make necessary changes before the effective date.

For California employers, the new federal threshold for exempt status will, for the first time, be higher than the California threshold. This represents a major change for California employers, who in the past have been able to assume that compliance with the California minimum would assure compliance with the federal minimum. California employers will now be required to separately track the federal minimums, which will increase every three years.

This webinar recording includes:

  • A summary of the criteria that must be met to classify an employee as exempt from overtime under both federal and California law
  • An explanation of the new regulations
  • A discussion of the practical implications that employers must now consider, including:
    • Whether to increase an employee’s salary to meet the new salary level requirements or reclassify the employee as non-exempt
    • What payment options are available for employees reclassified as non-exempt
    • How to avoid timekeeping pitfalls for employees reclassified as non-exempt
    • What to do when some employees working in a position are earning more than the new salary level while other employees working in that same position are earning less than the new salary level
    • How to communicate with employees being reclassified
    • Using these new regulations to reclassify employees whose exempt status may be questionable under the duties test
    • Impact on meal periods, rest periods and wage statements for California employees

Our Speakers

  • Alicia Anderson, Associate
  • Dale Hudson, Counsel

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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