Effective December 1, 2016, all salaried exempted employees in all 50 states must earn the new minimum wage of $47,476 per year or $973 per week. DOL has built in an automatic annual increase for the next three (3) years bringing the new threshold to $51,168 per year. The Federal DOL, in an attempt to ease this burden on employers, is allowing employers to factor in bonuses; incentives and commissions pay to meet the threshold up to a maximum of 10% of the pay. These bonuses; incentives and commissions pay must be paid at a minimum quarterly.
Keep in mind that some states may have different thresholds and may not recognize bonuses; incentives and commissions pay to meet exempt minimum wage. It is also important to understand that you must review both state and federal rules and insure that you are in compliance with both.
Although the exemption test has not changed, an emphasis is being placed on the 51% rule. This rule requires an employer to prove that the employee is spending 51% of their time performing exempt work such as managing as opposed to doing the manual work.
Employers should review all salary exempt employees and identify those who are making below the new requirement. You will either have to increase their wages to comply with the new minimum wage or change their status to hourly.
If you decide to keep them as salary exempt, please make certain they meet the 51% rule. If you need assistance, contact HRI and we can help you prepare a job description and analyze the duties to determine the status.
If you decide to make them hourly, they must follow all wage and hour regulations as outlined by your Wage Order (California) including rest and meal breaks, overtime and timekeeping requirements.
Confused? Attend our webinar on June 8th at 9am or contact us at [email protected]