A semi-monthly pay method means that employees receive paychecks on two designated dates per month, meaning the number of days in each pay period varies. Use this guide to simplify this sometimes tricky calculation: Calculating Semi-Monthly Overtime
The U.S. Department of Labor announced the new salary threshold for certain employees to qualify as exempt from minimum wage and overtime under the Fair Labor Standards Act’s White Collar Exemptions.
Effective December 1, 2016, the new minimum salary level will be $47,476 per year ($913 per week). Up to 10% of this income may come in the form of non-discretionary bonuses, incentive pay, or commissions, as long as that portion of the compensation is paid at least quarterly. In the event that an employee does not earn enough in bonuses and commissions to meet the full minimum salary requirement, a catch-up payment can be made by the employer once a quarter.
The minimum salary requirement applies to all white collar workers who are classified as exempt executive or administrative employees, and to many who are classified as exempt professional employees. The duties tests for the White Collar Exemptions have not changed.
Under the new rules, this salary threshold will increase every three years. It will be set at the 40th percentile of weekly earnings among full-time salaried (not necessarily exempt) employees in the country’s lowest income region – currently the South. It is expected that the next change, which will be effective January 1, 2020, will increase the minimum salary to approximately $51,168.
The new rule also increases the minimum salary threshold for the Highly Compensated Employee (HCE) exemption from $100,000 per year to $134,004 per year. This exemption can be used when an employee carries out a limited number of executive, administrative, or professional duties, but is very well-compensated. The new rule sets the HCE threshold at the 90th percentile of all full-time salaried workers nationally. This number will also increase every three years, and is expected to rise to approximately $147,524 on January 1, 2020.
Some state laws create different minimum salary levels. When state laws differ from the FLSA, an employer must comply with the standard most beneficial to employees. Come December 1, the federal minimum salary level will be higher than any state-mandated minimum, and therefore must be followed.
This guide can help you navigate the decision tree of FLSA: Federal FLSA Guide
The details on the new rule can be found on the US DOL website.
Following a directive from President Obama, the Department of Labor has proposed changes to the federal Fair Labor Standards Act (FLSA) rules regarding the executive, professional, and administrative exemptions (also called the white collar exemptions). Under the proposed rule, the annual salary requirement for a white collar exempt employee would more than double to approximately $50,000. This more-than-doubling of the salary requirement would mean that approximately five million workers who are currently exempt from overtime and minimum wage requirements would no longer qualify for an exemption.
In addition to the white collar salary requirement increasing, the proposed rules call for the salary requirement for exempt highly compensated employees to increase from $100,000 to about $122,000 per year. Finally, the rules contain a mechanism by which both the white collar and highly compensated employee salary requirements will adjust annually.
Before these proposed rules can go into effect, there will be a notice and comment period, followed by time for the Department of Labor to review and respond to comments and draft final rules. The last time large revisions were made to the FLSA, in 2004, 13 months elapsed between the introduction of the proposed rules and the release of the final rules. As before, we expect a large number of comments and much opposition from the business sector, and therefore a similarly long span of time before the rules are finalized. While it will likely be mid-to-late 2016 or even early 2017 before any changes to the FLSA white collar exemptions go into effect, given the sizeable increase to the salary requirement, we recommend employers begin to consider how they will handle the new requirements in their organization.
Only government agencies are permitted to offer compensatory time in lieu of overtime. If you are a private sector employer, you must pay overtime when an employee works over 40 hours in a workweek. (If your employee works 45 hours during one workweek, you could choose to schedule the employee for 35 hours during the following week, but that would not relieve you of the obligation to pay for the five hours of overtime during the first workweek.)
You have an employee who is shared by more than one company. The employee works less than 40 hours in a given week at each company, but when you add the the time cards together, she worked more than 40 hours in that week. Is the employee due overtime pay?
It depends on whether a “joint employment” relationship exists between the companies.
“Joint employment” describes the situation in which an employee works for more than one employer, but the employers have enough in common to be considered “one” under state and federal wage and hour laws. And if the employers meet this threshold and an employee works for both of them in a workweek, all of the hours must be counted to determine whether overtime is owed.
Whether a particular arrangement translates into “joint employment” is based upon all the circumstances in that individual case. The courts have used the following factors to make this determination:
- whether the employers share an employee’s services;
- whether the employer acts directly or indirectly in the interest of the other employer; and
- whether the employers are not disassociated with respect to an employee and share control of the employee; for example, where one employer controls, is controlled by, or is under common control with the other employer.
For instance, common ownership would support the control necessary to establish joint employment.
This does not mean that the employee will get paid overtime twice, but simply there is a shared obligation to compensate the employee for overtime hours paid.