Landrum Human Resources Companies Inc.
08/07/2024 | News release | Distributed by Public on 08/07/2024 10:28
FLSA Exemption Statuses and Non-Compliance Ramifications
Results of the Final Ruling
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Learn more about the intricate details of FLSA in our Webinar OnDemand and our Webinar Highlights blog.The US Department of Labor (DOL) issued a final rule on April 23, 2024, which took effect on July 1, 2024. The rule increased the salary threshold for certain exempt categories of workers on July 1, 2024, and will increase again on January 1, 2025. This means your exempt employees will need to earn at least this new threshold on each applicable date to be considered for exempt status (not subject to overtime under the FLSA). Non-exempt employees under the FLSA generally must be paid an overtime premium of 1.5 times their regular rate of pay for all hours worked beyond 40 in a workweek - unless they fall under an exemption.
Administrative, Executive, and Professional Exemptions: The current salary threshold for exempt employees is $684 a week ($35,568 annualized) under the administrative, executive, and professional exemptions - which are collectively known as the "white-collar" exemptions. The DOL's new rule increased the rate first to $844 a week ($43,888 annualized) on July 1, 2024, and will increase again to $1,128 ($58,656 annualized) on January 1, 2025. These significant increases require some planning if you have exempt employees who earn less than these threshold amounts.
Highly Compensated Employee Exemption: The threshold for the "highly compensated employee" (HCE) exemption was raised to $132,964 on July 1, 2024, and will increase again to $151,164 on January 1, 2025 - which is a significant increase from the current $107,432.
The rule indicates these salary thresholds will continue to be automatically updated every three years starting July 1, 2027.
Who are Exempt Employees under the Executive, Administrative, or Professional Exemption of the FLSA?
Generally, employees are considered exempt if they meet the DOL tests for the exemptions. Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA) | US Department of Labor (dol.gov).In addition to the exemptions above, the DOL has provided a list of other FLSA Exemptions (elaws - Fair Labor Standards Act Advisor (dol.gov)).
What are the Non-Compliance Ramifications?
It is up to the employer to ensure compliance with the FLSA. Investigators are placed across the United States to conduct investigations to ensure businesses are in compliance. If violations are found, they may recommend changes to bring the employer back into compliance with the FLSA. These investigations can begin for several reasons, the number one reason being confidential complaints.If a business is found to be in violation of minimum wage and overtime rules, the business will be required to pay back pay and an equal number of liquidated damages. Back wages may only be recovered within two years of the violations or three years if it was a willful violation. These back wages can be paid willfully by the employer or be brought in a suit by the Secretary of Labor or the employee. A suit may also include any attorney fees and court costs.
Failure to comply with the FLSA can also result in penalties. Repeated minimum wage and overtime pay requirements violations can lead to a civil money penalty of up to $2,451 per violation. Willful violations can result in criminal prosecution and a fine of up to $10,000.