If you are someone who has worked for hourly pay most of your life, then being offered a salaried position can sound like a dream come true. You know exactly how much you are going to be paid each week, you have a better job title, things are coming up roses. But wait.
Now you are working even more hours than you did before, and making less money! How can that be? I had a friend who was in the IT business a few years ago. Her salary was much higher than when she was working at the hourly rate. But the amount of hours she was working were staggering. Regular 80 hour work weeks were not uncommon. She loved her new job, but she realized that at this time she is now earning less money than if she were still being paid an hourly wage plus overtime.
She apparently was not the only one who figured out that as a salaried employee she was being short-changed. In the spring of 2016 the Department of Labor came out the updated rules which more clearly state the current guidelines for who falls under the updated rules for Overtime:( excerpt from https://www.dol.gov/whd/overtime/final2016/faq.htm#4
“1. Q. What is the purpose of the “Overtime” Final Rule?
This Final Rule updates the regulations for determining whether white-collar salaried employees are exempt from the Fair Labor Standards Act’s minimum wage and overtime pay protections. They are exempt if they are employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in the Department of Labor’s regulations at 29 CFR part 541. This exemption from the FLSA is sometimes referred to as the “white-collar” or “EAP” exemption.
2. Q. What is “overtime”?
Unless specifically exempted, employees covered by the FLSA must receive pay for hours worked in excess of 40 in a workweek at a rate not less than one and one-half their regular rates of pay. This is referred to as “overtime” pay.
3. Q. What determines if an employee falls within one of the white-collar exemptions?
To qualify for exemption, a white-collar employee generally must:
- be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”);
- be paid more than a specified weekly salary level, which is $913 per week (the equivalent of $47,476 annually for a full-year worker) under this Final Rule (the “salary level test”); and
- primarily perform executive, administrative, or professional duties, as defined in the Department’s regulations (the “duties test”).
Certain employees are not subject to either the salary basis or salary level tests (for example, doctors, teachers, and lawyers). The Department’s regulations also provide an exemption for certain highly compensated employees (“HCE”) who earn above a higher total annual compensation level ($134,004 under this Final Rule) and satisfy a minimal duties test.
4. Q. Why is the Department revising its overtime regulations for white-collar workers now?
On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department to update and modernize the regulations defining which white-collar workers are protected by the FLSA’s minimum wage and overtime standards. The salary level test is supposed to help identify salaried workers who are entitled to overtime pay when they work long hours. The current salary level is outdated and no longer does its job of helping to separate salaried white-collar employees who should get overtime pay for working extra hours from those who should be exempt. Through this Final Rule, the Department is updating these regulations to ensure that the FLSA’s intended overtime protections are fully implemented, and to simplify the identification of overtime-eligible workers, thus making the exemption easier for employers and workers to understand and apply. These revisions will also help ensure that in the future the regulations continue to appropriately separate workers who are entitled to overtime protections and those who may be exempt.”
To see the rest of this information head on over to the United States Department of Labor Website