Wednesday, July 6, 2016

NEW EXEMPT SALARY THRESHOLD

Under current regulations of the Fair Labor Standards Act (FLSA), several exemptions allow employers to exempt certain employees from overtime pay.  However, in order to qualify for an overtime exemption, an exempt employee must be paid at least $455 per week ($23,660 annually).  One of the most common overtime exemptions claimed by employers is FLSA section 13(a)(1).  This exemption applies to certain management and professional positions with an annual salary in excess of $23,660 per year.

As of December 1st of this year, the salary threshold to qualify for exempt status will increase to $913 per week ($47,476 annually).  Employers need to carefully review their payroll data to identify all existing exempt employees that earn a current salary near or below the new exemption amount of $47,476. 

The U.S. Department of Labor estimates the new exemption threshold may impact up to 5 million American workers.  If you are an employer facing a direct impact from the new regulations, then you have a few different options to remain compliant as of December 1st.  Please call our office if you would like our assistance to review your options.

Nick S. Wold, CPA, MA

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