In 1938 the Fair Labor Standards Act was created to mandate the federal minimum wage, regulate child labor, and determine exempt and nonexempt rules for overtime pay. At the date of mandate, overtime was paid if a non-exempt employee worked over 60 hours.
Today, a nonexempt employee is subject to overtime if he or she works over 40 hours in a workweek. Updates have been made to the categorization of exempt employees as well.
Traditionally, these employees were exempt from overtime if they fell into one of the following categories: executive, administrative, professional, or high-salaried. Today, two additional categories have additional specific conditions: outside sales and computer positions.
66 years later, besides modernizing overtime regulations, the Department of Labor (DOL) raised the salary test from $250 to $455 per week, and the high salary test was raised to $100,000. The salary test is the minimum earnings allowed to avoid overtime compensation; however, some professionals, such as teachers, do not have a salary test.
This year, the DOL is proposing updates to these rules for 2016. Their proposal aims to update the assessment of exempt/non-exempt so that anyone considered exempt must meet all of the following tests:
1. Duties test – no specific changes proposed, but they are seeking to determine if the current test is working as intended, to screen out those who are not bona fide white collar exempt employees
2. Salary level test – increased to $970 a week or $50,440 a year for the executive, administrative, and professional classifications
3. High salary test – increased to $122,148
The comment period is now closed, so keep an eye out for the next DOL notice. For more information regarding this proposal, visit the DOL/Wage and Hour Division.
Image courtesy freedigitialphotos.net/adamr
