New Threshold for the Fair Labor Standard Act

New Threshold for the Fair Labor Standard Act

A man pushing boxes on a dolly. The text reads, "New Threshold for the Fair Labor Standard Act"

The Fair Labor Standard Act (FLSA) directly impacts you and your employees.  

In this blog post, we will explain what the Fair Labor Standard Act is and its background, the new thresholds and requirements, and the effects of improper deductions from your salary.  

At The Human Resource USA, we protect you by keeping you up to date.  

Keep reading to learn more about the FSLA and how it impacts your business.  


What is the Fair Labor Standard Act? 


The Fair Labor Standards Act is a federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in both the private and public sectors.  

The FLSA sets the federal minimum wage, currently at $7.25 per hour, and requires employers to pay their employees at least this amount for all hours worked. 

It also mandates that non-exempt employees receive overtime pay, equal to one-and-a-half times their regular rate, for hours worked over 40 in a workweek.

Additionally, the FLSA regulates the employment of minors by setting limits on the types of jobs they can perform and the hours they can work.

Recent proposed rule changes to the FLSA include an increase in the standard salary level and total annual compensation threshold for certain employee exemptions. 

These changes aim to expand overtime pay eligibility for more workers by raising the minimum salary required for employees to qualify as exempt from overtime provisions. If implemented, these changes could significantly impact the earning potential and job responsibilities of millions of American workers. 


Background on FLSA 


The Fair Labor Standards Act (FLSA) is a federal law that governs employee classification and pay.  

Recently, the FLSA implemented changes to the salary threshold for exempt employees, raising it to $35,568 per year. This means that your employees who earn less than this amount must be classified as non-exempt and are entitled to overtime pay. 

Exempt employee groups, such as executive, administrative, and professional employees, will also be impacted by these changes.  

You may need to reclassify certain employees to ensure compliance with the new salary threshold. This requires a thorough review of job duties and salaries to determine the appropriate classification. 

Considering these changes, you must ensure that all your employees are properly classified and compensated in accordance with the FLSA. 

It is essential to stay informed about the latest regulations and make any necessary adjustments to avoid potential legal issues. 

The recent changes to the FLSA have significant implications for employee classification and pay within organizations, requiring careful assessment and potential reclassification to comply with the new salary threshold for exempt employees. 

The Fair Labor Standards Act (FLSA) is a critical piece of legislation that ensures fair and equitable treatment for employees in terms of wages, hours, and working conditions. Recent proposed rule changes seek to further enhance these protections for workers. 


Overview of New Thresholds and Requirements for FLSA 


The Department of Labor has proposed an increase in the salary threshold for white-collar- exemptions under the Fair Labor Standards Act (FLSA).

Currently, your employees must earn at least $455 per week to be exempt from overtime pay, but the proposed rule would increase this threshold to $679 per week. 

In addition, the total annual compensation requirement for highly compensated employees would be raised from $100,000 to $147,414.

To qualify for exempt status, employees must also meet certain job duty criteria, such as performing executive, administrative, or professional tasks.  

These changes are expected to have a significant impact on both you and your employees. Employees who are currently exempt but earn less than the new threshold may become eligible for overtime pay, while you will need to review and adjust your policies to ensure compliance with the new requirements. 

Furthermore, the proposed rule includes provisions for automatic updates to the salary thresholds to account for inflation, making sure that your employees remain aligned with the cost of living. This has the potential to have varying effects on different states as the cost of living differs across the country. 

Overall, the proposed changes seek to provide fair compensation for employees and streamline FLSA exemptions. 


The Effects of Improper Deductions from Your Salary 


Improper deductions from an employee's salary can result in the loss of exemption status, leading to potential employee reimbursement and legal consequences for you.

Deductions must be made in accordance with labor laws and allowable circumstances, such as taxes, court-ordered garnishments, or voluntary deductions. 

The proposed rule to increase the annual salary threshold for "white collar" exemptions could impact you and your employees by potentially increasing the number of employees eligible for overtime pay.  

To proactively prepare for potential changes and compliance with the proposed rule, you should review your employee's current salary and exemption status, assess the potential impact on their workforce and budget, and consider making necessary adjustments to avoid improper deductions and maintain compliance with labor regulations.  


Partner with The Human Resource USA and Stay Compliant with Labor Laws 


We recognize that it can be difficult to stay up to date with all the new updates and laws that have an impact on you and your employees.   

However, by understanding what the FLSA is and making sure that you are following the new standards, you will not have to face legal consequences.  

At The Human Resource USA, we are eager to partner with you to navigate all your HR compliance, helping you stay on top of all your HR matters.  

For instance, if you want to learn about business 4th quarter audit compliance, click here

Our experienced team helps businesses in all industries and sectors discover human resource solutions that work for them.   

Click here to start a conversation with The Human Resource USA now!  

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