Fair Labor Standards Act - Law Change Effective Jan 1, 2020

Update Provided By: Susie Cirilli at Paisner Litvin LLP

​As we near the beginning of the end (of 2019), it is crucial that employers account (literally and figuratively) for changes in the law. The Department of Labor announced earlier this year that effective January 1, 2020, the minimum salary for exempt employees will increase to $684 per week ($35,568 annually). This is an $11,908 jump from the current minimum salary of $455 per week ($23,660 annually).

The Federal Regulations afford employers some relief in that up to 10% of the exempt employee’s salary may be paid in the form of a bonus, incentive or commission on a quarterly or annual basis.
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It is important to remember that salary alone is insufficient for an employee to be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act. (“FLSA”) The Act provides that employees classified as Professional, Administrative or Executive are exempt, provided that (1) the primary duty of the employee’s work is exempt, and (2) the employee meets the minimum salary amount. The following is a general overview of the primary duties for each exempt employee classification:

Professional: The primary duty is the performance of work that (1) requires knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or (2) requires invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. 29 C.F.R. §541.300
Administrative: The primary duty is the (1) performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers and (2) includes the exercise of discretion and independent judgment with respect to matters of significance. 29 C.F.R. §541.200
Executive: An Executive employee’s primary duty is the (1) the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; and (2) direction of work of two or more other employees. These employees also have the authority to hire or fire other employees, or can make recommendations as to the hiring, firing, promotions and the like. 29 C.F.R. §541.100
It is imperative for employers to ensure that all employees are correctly classified. Misclassification of employees exposes the company to potential exposure under the FLSA and state laws. Lastly, in addition to the federal law, it is essential for employers to pay attention to the state and local laws where their employees are working.
Feel free to reach out to Susie Cirilli at Paisner Litvin with any questions regarding issues surrounding your business and employees.