For information and additional resources about this topic, check out the Virginia Conference website.
On May 18, 2016, the US Department of Labor the Department of Labor issued a new rule that updates the regulations determining which white-collar, salaried employees are entitled to the Fair Labor Standards Act’s minimum wage and overtime pay protections. The rule increases the salary threshold below which most white-collar, salaried workers are entitled to overtime from the current $455 per week (or $23,660 for a full-year worker) to $913 per week (or $47,476 for a full-year worker).
This change means that all salaried, exempt positions have an increase in annual salary from a minimum of $23,660 to a minimum of $47,476. If the annual salary is less than $47,476, the position must be considered nonexempt.
All positions are classified as either “exempt” or “nonexempt.” Position duties must meet the U.S. Department of Labor tests (outlined below) to be classified as “exempt.”
Classifications should be clearly stated in each job description.
There is no change to an hourly employee’s pay or time tracking.
Nonexempt employees are expected to work the normal workday and workweek, unless their manager authorizes overtime in advance. Nonexempt employees will be paid overtime for all hours worked in excess of 40 in a workweek and must maintain a true and accurate record of hours worked.
- Not all employees who earn less than $913 per week must be “hourly.”
- An employee may be paid on a salary basis and still qualify for overtime. They would be classified as salaried non-exempt.
- Hours must be tracked by a timekeeping method to calculate all hours worked including any overtime pay for over 40 hours in a workweek. Overtime is calculated on actual hours worked over 40 in a weekly pay period – not including holidays or vacation days.
Exempt employees do not receive overtime pay. To qualify for exemption, all of the following tests must be met:
Executive Exemption: The employee must be compensated on a salary basis at a rate not less than $913 per week. The employee’s primary duty must be managing a customarily recognized department or subdivision of the enterprise. The employee must customarily and regularly direct the work of at least two or more full-time employees or their equivalent. The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.
Administrative Exemption: The employee must be compensated on a salary or fee basis at a rate not less than $913 per week. The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or employer’s customers. The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Professional Exemption: The employee must be compensated on a salary or fee basis at a rate not less than $913 per week. The employee’s primary duty must be the performance of work requiring advanced knowledge defined as work that is predominately intellectual in character and that includes work requiring the consistent exercise of discretion and judgment. The advanced knowledge must be in a field of science or learning. The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
Teachers’ Exemption: Teachers are exempt from overtime if their primary duty is teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge , and if they are employed and engaged in this activity as a teacher in an educational establishment. Exempt teachers include academic teachers, kindergarten or nursery school teachers, and music teachers. The salary and salary basis requirements do not apply to bona fide teachers.
Creative Professional Exemption: To qualify for the creative professional employee exemption, all of the following must be met:
- The employee must be compensated on salary or fee basis (as defined in the regulations) at a rate not less than $913 per week.
- The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
- The employee’s duties include work requiring consistent exercise of discretion and judgment.
This requirement distinguishes the creative professions from work that primarily depends on intelligence, diligence and accuracy. The requirements are generally met by actors, musicians, composers, soloists, writers, novelists, and others as set forth in the regulations.
Reprinted with permission from The Florida United Methodist Church, www.flumc.org