You may have heard some information about President Obama’s Executive Order regarding proposed changes to the Fair Labor Standards Act (FLSA).  Last week he directed the Department of Labor to re-evaluate and update its regulations regarding the Exempt classification of employees.

Group of a diversity businesspeople discussing in office.

  • Currently, to qualify as an Exempt (no overtime pay) employee there are certain guidelines that must be met including a minimum salary ($455/week) and job responsibilities such as supervising.  The job guidelines are pretty stringent.  President Obama is looking to increase the minimum salary to meet the qualification.  That number has not yet been defined, but the indication is that it will be by “a significant amount.”  This means that a substantial number of employees currently classified as Exempt from the overtime requirements would no longer meet the classification and thus would be eligible for overtime pay.
  • In addition, at the end of January President Obama increased the minimum wage for companies that do business with the federal government from $7.25/hour to $10.10 an hour.

At this point, we still do not know much about the FLSA changes the administration will propose, but we will keep you informed.  Misclassification of employees as Exempt (salaried) rather than as Non-Exempt (hourly) can result in significant penalties and review of up to three years of your payroll, depending upon whether the DOL believes that the misclassification is intentional.

If you have any concerns about whether your employees are classified appropriately, please do not hesitate to contact Sandie Peterson, SPHR, CPBA for assistance at 239-433-5554.