The new salary threshold for exempt employees is coming soon. The current minimum level is $35,568 per year ($684 per week) and the proposal is to increase it to $55,068 per year ($1059 per week). The salary level for Highly Compensated Employees (HCE) would also rise from the current $107,432 to $143,988. These change swill make almost four million workers eligible for overtime. What should employers do to prepare? Recently, I read an interesting post by Brodie Erwin and Sarah Spangenburg from Kilpatrick on this momentous topic.
One thing they recommend, which I heartily endorse, is conducting an internal audit of all positions currently classified as exempt. I have done, literally, dozens of these audits for clients, rendering a bullet-pointed summary of findings (without a lot of legalese) noting which jobs are non-exempt and how they can be “enhanced” to become exempt. Sometimes, the decision is to leave the jobs non-exempt and then the decision as to how to roll out the changes must be made. It must be done in a manner so as to not “instigate” the filing of a lawsuit!
In this regard, those employees deemed exempt currently will need to be raised to the new salary minimum if the employer wishes to maintain the exemption. But, as the Kilpatrick article notes, the most crucial scrutiny must be given to whether the duties performed fit within any of the three “white collar” exemptions. If the duties do not fall into the exemption, the, really, only choice is not to raise the salaries of these workers, but to re-classify them.
Another issue is time keeping. Employers need not keep time records of truly exempt employees but obviously must record time for non-exempts. The burden of accurate timekeeping, the recording of hours worked, always remains with the employer and is, honestly, the employer’s first (and best) line of defense when employees claim they worked extra hours. This requirement also applies to employees working remotely, as is more common these days (for both exempts and non-exempts).
The Takeaway
Employers must also be aware that States may have higher salary levels for exempt status, like New York which is approximately $1200 per week. It is not sufficient to comply only with federal law as an employee may sue under a more friendly State statute. If employers are unsure of whether employees are exempt or not, it may be more prudent not to raise their salaries to the new level but to convert them to non-exempt (whether hourly or salaried non-exempt) and play it safe. As stated above, the starting point for these analyses is a comprehensive internal audit of all positions currently deemed exempt.
Be proactive. ..
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