Category Archives: exemptions

Is The Minimum Required Salary For Exempt Employees Increasing In Your State In 2019?

While the FLSA minimum salary requirements for “white collar” employees (executive, administrative, or professional employees) is not changing in 2019 (at least not until/unless the Department of Labor announces a new Overtime Rule), there are several states where the minimum salary requirements for exempt employees is increasing in 2019 (December 31, 2018 for New York employers).

These increases (i.e. in Alaska, California, Colorado, Maine, New York, and Oregon) are occurring because the minimum exempt salary rates for these employees (as established under state law) are scheduled to increase in 2018 (December 31st for New York employers).

Under the Fair Labor Standards Act (FLSA), the minimum salary requirements for white collar employees is as follows:

Payment Schedule Minimum Salary
Weekly $455
Bi-Weekly $910
Semi-Monthly $985.83
Monthly $1,971.66
Annual $23,660

The below table sets forth the changes to the minimum salary requirements for exempt employees in these states.  In those instances where the state minimum salary requirements are lower than the above-listed FLSA requirements, the higher salary threshold applies for employers who are subject to FLSA in order for employees to qualify for an exemption under the FLSA.

Alaska
Applicable Law: An individual employed in a bona fide executive, administrative, or professional capacity shall be compensated on a salary or fee basis at a rate of not less than two times the state minimum wage for the first 40 hours of employment each week, exclusive of board or lodging that is furnished by the individual’s employer. Alaska Stat. § 23.10.055(b).

 Since Alaska’s minimum wage is increasing to $9.89 per hour starting January 1, 2019, the minimum salary for exempt employees is increasing as follows:

Payment Schedule 2018 Minimum Salary 2019 Minimum Salary
Weekly $787.20 $791.20
Bi-Weekly $1,574.40 $1,582.40
Semi-Monthly $1,705.60 $1,714.27
Monthly $3,411.20 $3,428.53
Annual $40,768 $41,142.40
California
Applicable Law: Overtime-exempt executive, administrative and professional employees must earn a monthly salary equivalent to at least two times the state minimum wage for full-time employment. IWC Wage Orders.

 Since California’s minimum wage is increasing to $11.00 per hour (for employers with 25 or less employees) and $12.00 per hour (for employers with 26 or more employees) starting January 1, 2019, the minimum salary for exempt employees is increasing as follows:

Small Employers (25 or less employees)
Payment Schedule 2018 Minimum Salary 2019 Minimum Salary
Weekly $840 $880
Bi-Weekly $1,680 $1,760
Semi-Monthly $1,820 $1,906.67
Monthly $3,640 $3, 813.34
Annual $43,680 $45,760
Large Employers (26 or more employees)
Payment Schedule 2018 Minimum Salary 2019 Minimum Salary
Weekly $880 $960
Bi-Weekly $1,760 $1,920
Semi-Monthly $1,906.67 $2,080
Monthly $3,813.34 $4,160
Annual $45,760 $49,920
Colorado**
Applicable Law: Exempt executive/supervisory employees must be a salaried employee earning in excess of the equivalent of the minimum wage for all hours the employee worked in a workweek. Colorado Minimum Wage Order.

Note: The administrative and professional exemptions only require that an employee be a “salaried individual” and does not provide a minimum salary requirement.

 Since Colorado’s minimum wage is increasing to $11.10 per hour starting January 1, 2019, the minimum salary for exempt executive/supervisory employees is increasing as follows:

Payment Schedule 2018 Minimum Salary* 2019 Minimum Salary*
Weekly $408 $444
Bi-Weekly $816 $888
Semi-Monthly $884 $962
Monthly $1,768 $1,924
Annual $21,216 $23,088
* These numbers are based on the employee working 40 hours per week.  If the employee works more than 40 hours per week, the required pay will be greater.
** In order for an executive employee to meet the minimum salary requirement under the FLSA, the employee will need to be paid the FLSA minimum salary.  However, once that employee works over 41 hours in a week, the state minimum wage salary requirement will apply.
Maine
Applicable Law: The minimum salary requirement to qualify for an executive, professional or administrative exemption is 3,000 times the Maine minimum hourly wage or the minimum salary required by the federal Fair Labor Standards Act, whichever is higher. 26 M.R.S 663(3)(K).

 Currently, the state threshold is higher than the FLSA threshold; therefore, the state threshold applies.

Since Maine’s minimum wage is increasing to $11.00 per hour starting January 1, 2019, the minimum salary for exempt employees is increasing as follows:

Payment Schedule 2018 Minimum Salary 2019 Minimum Salary
Weekly $576.92 $634.61
Bi-Weekly $1,153.84 $1, 269.23
Semi-Monthly $1,250 $1,375
Monthly $2,500 $2,750
Annual $30,000 $33,000
New York – INCREASES 12/31/2018
Applicable Law: Exempt executive and administrative employees must be paid at least the minimum salary set forth in the applicable New York Wage Orders.

 Note: There is no salary basis test for professional employees under New York law.

Under the amendments to the New York Wage Orders, the minimum salary for exempt executive and administrative employees is increasing on December 31, 2018 as follows:

New York City (11 or More Employees)
Payment Schedule Current Minimum Salary Minimum Salary On 12/31/18
Weekly $975 $1,125
Bi-Weekly $1,950 $2,250
Semi-Monthly $2,112.50 $2,437.50
Monthly $4,225 $4,875
Annual $50,700 $58,500
New York City (10 or Fewer Employees)
Payment Schedule Current Minimum Salary Minimum Salary On 12/31/18
Weekly $900 $1,012.50
Bi-Weekly $1,800 $2,025
Semi-Monthly $1,950 $2,193.75
Monthly $3,900 $4,387.50
Annual $46,800 $52,650
Nassau, Suffolk & Westchester Counties
Payment Schedule Current Minimum Salary Minimum Salary On 12/31/18
Weekly $825 $900
Bi-Weekly $1,650 $1,800
Semi-Monthly $1,787.50 $1,950
Monthly $3,575 $3,900
Annual $42,900 $46,800
Remainder of State
Payment Schedule Current Minimum Salary Minimum Salary On 12/31/18
Weekly $780 $832
Bi-Weekly $1,560 $1,664
Semi-Monthly $1,690 $1,802.67
Monthly $3,380 $3,605.34
Annual $40,560 $43,264
Oregon*  – INCREASES 7/1/2019
Applicable Law: The minimum salary requirement to qualify for an executive, professional or administrative exemption is the applicable minimum wage multiplied by 2,080 hours per year and then divided by 12 months. Or. Rev. Stat. § 653.010(9).

 Since Oregon’s minimum wage is increasing to $11.00 per hour (for employers in “nonurban counties”), $12.50 per hour (for employers in the Portland metropolitan area), and $11.25 per hour (for the remainder of the state) starting July 1, 2019, the minimum salary for exempt employees will be increasing as follows:

Nonurban Counties (Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler counties)
Payment Schedule Current Minimum Salary Minimum Salary On 7/1/19
Weekly $420 $440
Bi-Weekly $840 $880
Semi-Monthly $910 $953.34
Monthly $1,820 $1,906.67
Annual $21,840 $22,880
Portland Metropolitan Area
Payment Schedule Current Minimum Salary Minimum Salary On 7/1/19
Weekly $450 $500
Bi-Weekly $900 $1,000
Semi-Monthly $975 $1, 083.34
Monthly $1,950 $2, 166.67
Annual $23,400 $26,000
Remainder of the State
Payment Schedule Current Minimum Salary Minimum Salary On 7/1/19
Weekly $430 $450
Bi-Weekly $860 $900
Semi-Monthly $931.67 $975
Monthly $1,863.33 $1,950
Annual $22,360 $23,400
NOTE:  Currently, only employers in the Portland metropolitan area must pay the state salary in order for to qualify for an executive, professional or administrative exemption.  All other employers in Oregon must pay the FLSA minimum salary in order for to qualify for an executive, professional or administrative exemption.

While not increasing, the minimum salary requirements to qualify for an executive, professional or administrative exemption is higher than the FLSA threshold in the following states:

Connecticut
Applicable Law: The minimum salary requirement to qualify for an executive, professional or administrative exemption is $475 per week. Regs., Conn. State Agencies § 31-60-14.
Payment Schedule Current Minimum Salary
Weekly $475
Bi-Weekly $950
Semi-Monthly $1,029.17
Monthly $2,058.33
Annual $24,700
Iowa
Applicable Law: The minimum salary requirement to qualify as a “high-salaried” executive, professional or administrative employee (and qualify for an exemption from overtime if the duties test is also met) is $500 per week. 875 Iowa Admin. Code 218.1-218.3.
Payment Schedule Current Minimum Salary
Weekly $500
Bi-Weekly $1,000
Semi-Monthly $1,083.34
Monthly $2,166.67
Annual $26,000

Recommendation for Employers

It is recommended that employers in these states verify that their exempt employees are receiving at least the minimum salary requirement to qualify for the exemption.

Also, please remember that meeting the salary requirement is just one element needed to qualify for an exemption from overtime.  The employee in question must also meet the duties test and the salary basis test.

Supreme Court (Finally) Rules Auto Dealership Services Advisors Are Exempt from Overtime

On April 2, 2018, the US Supreme Court settled a contentious battle of interpretations under the Fair Labor Standards Act (FLSA): are auto dealership service advisors exempt under the FLSA? To the relief of dealerships across the country, the court held that they are exempt. While addressing a narrow range of employees (service advisors), this case was a victory for employers and arguably establishes (or re-establishes) an employer’s right to reasonably interpret the law in its employment practices.

Some Brief History

The FLSA provides that “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” is exempt from overtime. Until 2011, the US Department of Labor had interpreted this provision to mean that auto dealership service providers were exempt because such employees were engaged in servicing automobiles by determining the service needs of vehicles and selling supplemental services to customers.  In 2011, the DOL reversed course (and 40 years of precedent) and stated that service advisors are non-exempt, thus entitling them to overtime pay and creating significant wage and hour liability for auto dealerships.

Various service providers took this opportunity to bring a class action lawsuit against Encino Motorcars for unpaid overtime and other wage and hour violations.  After making it all the way to the Supreme Court, back down to the Ninth Circuit Court of Appeals, and back up to the Supreme Court again, the case has been settled.

In short, the Supreme Court held that the law was clear: service advisors are exempt from overtime pay under the FLSA because they are “salesme[n]…primarily engaged in…servicing automobiles.”

An Important Note

In ruling for the dealership, the Supreme Court rejected the commonly cited principle of interpretation that the FLSA’s exemptions should be interpreted narrowly. Instead, the court held that a court’s role in reading the FLSA exemptions is to give them a fair reading.  This means that moving forward, instead of interpreting the law in a manner that all but assumes an employer has misclassified an employee as exempt, courts should afford employers a fair opportunity to demonstrate that their interpretation of the law is reasonable.

Is The Minimum Pay Required For Commissioned Employees To Qualify For An Overtime Exemption Increasing In Your State In 2018?

While the minimum pay required for commissioned employees to qualify for an overtime exemption is not changing in 2018, there are several states where the minimum pay requirements for a “commissioned employee overtime exemption” are increasing.

These increases (i.e. in California, Colorado, Minnesota, Oregon, Washington, and Washington DC) are occurring because the pay an inside or commissioned salesperson must receive to qualify for the inside or “commissioned” sales exemption (as established under state law) are scheduled to increase in 2018 (December 31st for New York employers).

Under the Fair Labor Standards Act (FLSA), in order for a commissioned salesperson to qualify for the FLSA’s 7(i) overtime exception (Commissioned Salesperson Exemption), the following three conditions must be met:

  1. The employee must be employed by a retail or service establishment, and
  2. The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked, and
  3. More than half the employee’s total earnings in a representative period must consist of commissions.

Unless all three conditions are met, the Commissioned Salesperson Exemption is not applicable, and overtime premium pay must be paid for all hours worked over 40 in a workweek at time and one-half the regular rate of pay.

The below table sets forth the changes to the minimum salary requirements for exempt employees in these states.  In those instances where the state minimum salary requirements are lower than the above-listed FLSA requirements, the higher salary threshold applies for employers who are subject to FLSA in order for employees to qualify for an exemption under the FLSA. Continue reading Is The Minimum Pay Required For Commissioned Employees To Qualify For An Overtime Exemption Increasing In Your State In 2018?

Check to See if the Minimum Required Salary For Exempt Employees is Increasing In Your State

While the minimum salary requirements for “white collar” employees (executive, administrative, or professional employees) is not changing in 2018 (at least not until/unless the Department of Labor announces a new Overtime Rule), there are several states where the minimum salary requirements for exempt employees is increasing in 2018 (December 31st for New York employers).

These increases (i.e. in Alaska, California, Colorado, Maine, New York, and Oregon) are occurring because the minimum exempt salary rates for these employees (as established under state law) are scheduled to increase in 2018 (December 31st for New York employers).

Under the Fair Labor Standards Act (FLSA), the minimum salary requirements for white collar employees is as follows:

Payment Schedule Minimum Salary
Weekly $455
Bi-Weekly $910
Semi-Monthly $985.83
Monthly $1,971.66
Annual $23,660

Continue reading Check to See if the Minimum Required Salary For Exempt Employees is Increasing In Your State

Trick or Treat! DOL Treats Employers with the promise of a new Overtime Rule

On October 30, 2017, the US Department of Labor announced that it will soon “undertake new rulemaking with regard to overtime.”   This announcement comes after the public comment period on the DOL’s Request for Information (RFI) regarding the Overtime Final Rule (where the DOL was seeking public input on what changes should be made to the overtime rule) closed.

In addition to this announcement, the Department of Justice, on behalf of the Department of Labor, filed a notice to appeal the Court’s ruling on the motion for summary judgment challenging the Overtime Rule.  In this ruling (which was issued on August 31, 2017), the Court held that the Overtime Rule’s salary level exceeded the DOL’s authority, and concluded that the Final Rule is invalid.  The DOJ does not, however, intend to proceed with this appeal until the DOL determines what the new exempt salary level should be.

At this time, the DOL has not released any further information regarding the release of a New Overtime Rule.  However based on previous comments made by Secretary Acosta, it is expected the new salary level will be in the low $30,000 range.

The next step in the rulemaking process will be for the DOL to issue a proposed rule.  Once that proposed rule is published, there will be a public comment period followed by the issuance of a final rule.

It is recommended that all employers keep on the lookout for this new rule.  In addition, we will continue to report developments here.

NEW LAW: California MINIMUM PAY FOR EXEMPT COMPUTER PROFESSIONALS AND HOURLY-PAID PHYSICIANS TO INCREASE IN 2018

The California Department of Labor Standards Enforcement (DLSE) recently announced that the minimum pay requirements for exempt computer professionals and hourly-paid physicians and surgeons will increase effective January 1, 2018 as follows:

  • Exempt computer professionals must be paid at least $43.58 per hour, or a minimum salary of $7,565.85 monthly or $90,790.07 annually to be eligible for the professional exemption from overtime
  • Hourly paid physicians and surgeons must be paid at least $79.39 per hour to be eligible for the professional exemption from overtime

It is recommended that employers who employ these type of employees review the compensation levels of these employees and verify that their compensation meets the new minimum pay rates in order for any exemption from overtime to be retained.

UPDATE: The DOL Overtime Rule Is Officially Dead!

Employers across the country can breathe a collective sigh of relief.  On August 31, 2017, the US District Court for the Eastern District of Texas issued a final ruling that officially invalidates (or kills) the DOL Overtime rule.  In short, the Court found that the DOL had “overstepped its bounds” by setting such a high salary level for the executive, administrative, and professional exemptions.

What does this mean for employers?

In short, this ruling means that the exempt salary threshold for executive, administrative, and professional employees remains at $23,600 per year (or at the established state level, if the employer is in a state that has implemented a higher exempt salary threshold).

Final thoughts

One thing of note, the Court clarified that its ruling did not mean that the DOL could not set any minimum salary level as one of the tests for determining whether an individual is exempt from overtime under these exemptions.  With this in mind, there remains a possibility that the DOL may attempt to increase the minimum salary level in the future.  However, if that increase were to occur, it would most likely be a much less drastic increase (and not a doubling of the existing salary level).

At the present time, the DOL has not announced any intention to seek an increase of the salary level.  That being said, employers should prepare for an eventual increase to the exempt salary threshold, even though it isn’t clear what the final number will be.

Further Clarification Regarding The DOL Overtime Rule

In its reply brief, filed June 30, 2017, the DOL has (somewhat) clarified its position with respect to the DOL Overtime Rule.

In this brief, the DOL has asked that the Court affirm the DOL’s continued ability to include a salary level test as a part of the “white collar exemption” FLSA test. The DOL has also requested that the temporary injunction against the DOL Overtime Rule be lifted.

While this latter request might cause employers alarm, the DOL also specifically asked that the Court not address the validity of the $913 per week salary level set forth in the current DOL Overtime Rule because the DOL intends to revisit the salary threshold through new rulemaking.

What Does This Mean for Employers?

Bottom line, the DOL Overtime remains “on hold” for the foreseeable future. It appears that the DOL may attempt to draft a revised rule, with a lower salary threshold. Employers must continue to “wait and see.”

For the time being, the minimum salary threshold for the white-collar exemptions remains at $455 a week. The salary threshold for the highly compensated employee exemption remains at $100,000 per year.

DOL Overtime Rule Update – R.I.P. Overtime Rule?

Since the injunction against the Department of Labor’s Overtime Rule was issued on November 23, 2016 (see FLSA Overtime Rule Blocked by Texas Federal Court), employers have been wondering when (if ever) the DOL Overtime Rule will go into effect.

Until recently, the Department of Labor has kept (relatively) silent about the fate of the Overtime Rule. However, last week (June 7, 2017) Secretary of Labor Acosta said that he will soon formally request the public’s input on new overtime regulations. Many experts believe this comment indicates that the DOL is considering dropping its defense of the litigation challenging the injunction against original rule.

When asked about the DOL’s plans concerning the Overtime Rule, Acosta said that the DOL plans to look at the overtime rule “as a general matter.”

I think that any rule that has a dollar amount that isn’t updated for as long as this … is a problem because life gets a lot more expensive,” he said. “But I also think that the way it was done created a shock to the system and the department is in the process of drafting a request for information that I think will be filed in … probably the next 2 to 3 weeks asking for public information and public comment on the overtime rule.

While these comments do not reveal the DOL’s ultimate plans for the Overtime Rule, they do indicate that the fate of the Rule will soon be revealed. Until such time, we recommend that employers who did not already take action to comply with the DOL Overtime Rule continue to delay any action until the status of the Overtime Rule is known. It is also recommended that employers take the opportunity to review their exempt positions against the duties tests.

UPDATE – DOL Overtime Rule

Since the injunction against the Department of Labor’s Overtime Rule was issued on November 23, 2016 (see FLSA Overtime Rule Blocked by Texas Federal Court), employers across the United States have been anxiously awaiting one thing – a final decision regarding this rule.

While the final fate of the Rule (still) has not been decided, there may be a light at the end of the tunnel.

The DOL recently requested (another) extension to file its reply brief to its appeal of the preliminary injunction.  This extension was granted and the DOL now has until June 30th to file a reply brief.

What this means for employers

Unfortunately, employers are still in the “wait and see” mode when it comes to the DOL rule.

To the extent that a company did not already take action to comply with the DOL Overtime Rule, we recommend that employers delay any action until a ruling has been issued on the appeal.  It is also recommended that employers take the opportunity to review their exempt positions against the duties tests.