Prepared for Exempt Salary Threshold Changes?

Misclassifying employees, particularly concerning salary exempt status and overtime eligibility, stands as one of the most financially burdensome blunders an employer can make. The repercussions of such misclassifications can result in severe damages when identified by enforcement agencies. Renewed attention from the Department of Labor underscores the imperative for employers to accurately classify their workforce.

Hence, ensuring proper classification of employees emerges as a paramount responsibility for employers. This entails evaluating whether a position, based on its duties and responsibilities, qualifies as exempt under the Fair Labor Standards Act (FLSA). It’s crucial to recognize that simply paying an employee a salary does not automatically grant exempt status.

Under the FLSA, an employee must fulfill specific duties to qualify for exemption, known as the duties test. Common exemptions include administrative, executive, or professional roles. Additionally, an employee must meet a certain salary threshold, which currently stands at $684 per week or $35,568 annually. However, it’s noteworthy that the Department of Labor has proposed raising this threshold to $1,059 per week or $55,068 annually, expected to take effect by mid-2024.

Employers should proactively prepare for this change to avoid last-minute adjustments. Conducting internal audits of employees falling within both the current and proposed salary thresholds is advised. Once identified, employers need to assess whether these employees’ duties align with the exempt employee criteria for white-collar exemptions. Subsequently, a decision must be made whether to maintain the exemption status by increasing the salary to meet the new minimum or reclassify the position as non-exempt.

It’s essential to recognize that while a position may meet exemption criteria, employers have the discretion to classify it as non-exempt and pay overtime accordingly. Factors like increased salary costs and frequency of overtime work should inform this decision-making process. If a position requiring overtime frequently and meeting exempt criteria, it might be prudent to maintain exemption status by adjusting the salary. Conversely, if a position typically works 40 hours or less per week, reclassification as non-exempt might be more appropriate.

For personalized guidance in navigating the best course of action amidst the FLSA salary threshold increase, reach out to NevadaHR for expert assistance. Our team is equipped to provide tailored recommendations and support to ensure your organization remains compliant and well-prepared for the regulatory changes ahead. Whether you’re grappling with employee classification issues or seeking clarification on exemption criteria, NevadaHR is here to help you navigate the complexities of FLSA compliance with confidence. Contact us today to leverage our expertise and streamline your preparation process.