Raising the Salary Threshold for the “White Collar” Overtime Exemptions

Kayla Moreland , May 13, 2015

The Fair Labor Standards Act (FLSA) is the federal law that establishes minimum wage and overtime pay. Under the FLSA, certain individuals who earn above a certain salary threshold are exempt from receiving minimum wage and overtime pay.

Under the white collar exemptions, employees must meet a salary threshold and must satisfy the “duties” portion of the exemption to be exempt from overtime. Last year, President Obama announced the need to modernize the overtime regulations as one of his top priorities for the upcoming year. Specifically, one of the goals was to raise the salary threshold for the “white collar exemptions,” which exempt certain executive, administrative, and professional employees from overtime.

Raising the Salary Threshold for the "White Collar" Overtime Exemptions
Raising the Salary Threshold for the “White Collar” Overtime Exemptions

What does this mean to you?

The current salary threshold—$455 a week—has been in effect since 2004 and therefore has not been subject to inflation or today’s cost of living. This means that individuals making as little as $24,000 a year can fall under the overtime exemption.  In other words, only a mere 11% of salaried workers, according to the Huffington Post, qualify for overtime pay under this “historically low” salary threshold. But the anticipated increase in the salary threshold (estimated to range from salaries of approximately $42,000 a year to $51,000 a year), however, will greatly increase the number of employees eligible for overtime pay.

Source: The Impact FLSA’s Overhaul Has on Exempt Employees, March 23, 2015 http://www.laborlawyers.com/the-impact-flsas-overhaul-has-on-exempt-employees?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original

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