Exempt or Not Exempt – That is the $47,476 Question

UPDATE: A federal judge has blocked implementation of the Department of Labor’s ‘overtime rule’, delaying its effect. Click here to learn more.

If you haven’t already, now is the time to prepare as the Department of Labor (DOL) has released its final rule to change the salary-basis threshold amount for exempting workers from overtime pay. Click here to read an overview from the DOL.

The new rule modernizes the white-collar overtime exemption under the Fair Labor Standards Act (FLSA) that was last updated in 2004. It extends overtime protection to most salaried workers earning less than $47,476 a year, or $913 a week. The current rule requires that the standard salary for an executive, administrative or professional employee be at least $23,600 a year, or $455 a week, to qualify for exemption from FLSA overtime requirements.

The new rule is effective on December 1, 2016 and employers need to make sure their pay practices are in compliance by that date.

The final rule will have a significant impact on the nonprofit sector. Many nonprofit jobs are currently classified as exempt. Organizations must decide to reclassify these positions as non-exempt, or to raise employees’ pay to ensure these jobs remain exempt.

While this new rule will change the salary requirement for classifying an employee, the primary responsibilities of the employee are still a part of the test as to whether the employee can be classified as exempt from overtime pay. The DOL has fact sheets to help you determine if your organization is correctly classifying its employees by their job responsibilities. Click here for the DOL fact sheets.

501 Commons is hosting a free webinar on June 16th from 1:00 to 2:00 p.m. which will outline the details of these changes and how nonprofits will be affected. Please feel free to attend if you aren’t already familiar with the new rule. Click here to register.

Compensation Connections has also created an infographic and animated description of the decision process with the steps you must take to be in compliance with the final rule. Click here to view this information.

All organizations should create a plan to deal with the change in the salary requirements and start looking at their job descriptions now to ensure they are in compliance with the Department of Labor’s FLSA rules by December 1, 2016.