On May 18, 2016, President Obama, along with Secretary Perez of the Federal Department of Labor, announced a new minimum compensation amount for employees who are classified as an exempt employee, effective December 1, 2016.
With this announcement, the minimum salary for an employee to be classified as exempt by the Federal Fair Labor Standards Act (FLSA) was increased from $455.00 per week to $913.00 per week, which is equivalent to $47,476.00 per year.
Although in the past, the minimum amount set by the Federal FLSA has had little impact on employers in California, the current change will result in an increase higher than the current California standard of twice minimum wage, which would be $840.00 per week, equivalent to $43,680.00 per year as of January 1, 2017 with the current increase in minimum wage to $10.50 per hour.
A recent bill was introduced into the Federal Senate, HR 6094, which was passed by the Senate, but has yet to be passed by the House of Representatives, and thus, also not signed into law. This bill was written in an effort to delay the implementation date of the new FLSA minimum exempt salary from the current implementation date of 12/1/2016 to an effective date of June 1, 2017.
As this newly introduced bill has not passed the legislative process, all employers should be aware that the existing implementation of December 1, 2016 is now the requirement of all employers.
All employers should take the necessary steps to review compensation for all of their exempt employees to ensure that they are being compensated at a rate of no less than $913.00 per week, $47, 476.00 per year.
Employees who are compensated at a lower rate of pay than the new requirement must be paid overtime applicable under State and Federal law effective December 1, 2016.
Employers who have questions about the new FLSA exempt requirements are welcome to contact Allardyce Resources LLC by clicking here.