Employment Law Matters                                    
May 23, 2016


More of Your Workers May be Entitled to Overtime
By  Molly Ryan
Last week, the Department of Labor (DOL) issued its final rule increasing the minimum weekly salary required for employees to qualify for certain exemptions to the overtime pay requirements under the Fair Labor Standards Act (FLSA). The DOL estimates this rule will impact approximately 4.2 million employees who must be reclassified as non-exempt and paid overtime for work in excess of 40 hours in a workweek. To avoid paying these employees overtime, employers will have to take action, such as increasing their base salaries to meet or exceed the new minimum salary requirements.

Briefly, the FLSA generally requires employers to pay overtime of at least one and one-half times the employer's regular rate of pay for all hours worked in excess of 40 hours in one workweek. However, some salaried employees are exempt from the overtime requirement, and therefore, are not entitled to overtime pay. The common exemptions include employees employed in an executive, administrative, or professional capacity (EAP employees). To qualify for one of these exemptions, employees must meet certain minimum requirements related to their primary job duties and be paid a fixed salary not less than the minimum amounts specified in the DOL's regulations.

The DOL's final rule does not change any of the existing job duty requirements to qualify for exemption. However, it significantly impacts the minimum salary required for these employees to qualify for exemption. Currently, the minimum salary level EAP employees must be paid to come within the exemption is $455 per week, or $23,600 per year for a full-year worker. However, effective December 1, 2016, this minimum salary level more than doubles - to $913 per week, or $47,476 per year for a full-year worker. Notably, the final rule permits employers to satisfy up to 10 percent of the minimum salary requirement with nondiscretionary bonuses, incentive payments, and commissions, as long as they are paid at least quarterly.

The DOL's final rule also increases the total annual compensation required to qualify for the Highly Compensated Employee exemption from $100,000 to $134,004.

To prevent the minimum salary levels from becoming outdated, the final rule includes a mechanism to automatically update the salary thresholds every three years, starting on January 1, 2020.

The DOL's final rule may result in significant increased administrative and labor costs to your organization. Employers should start evaluating the impact of the new minimum salary requirements now, and develop a plan to ensure compliance by December 1, 2016 (the effective date of the minimum salary requirements).

If you have any questions about this or other workplace developments, please do not hesitate to contact  me  or another attorney in Meagher & Geer's  Employment Law Group .


In the News
Meagher & Geer congratulates Nova Classical Academy's mock trial team for its championship win in the Minnesota State Bar Association mock trial competition, and its third place finish at the national mock trial competition.  Meagher & Geer's attorneys, led by Bradley Lindeman , have been involved as volunteer coaches and judges for the team, and the firm provides financial support to the team.  Nova Classical Academy is a public charter school located in Saint Paul, Minnesota.

The Minnesota State Bar Association (MSBA) recognized Kathleen Ghreichi, an attorney in Meagher & Geer's Employment Law Group, as a North Star Lawyer for donating her time and talent to providing pro bono legal services to low-income persons. North Star Lawyers are MSBA members that have provided 50 or more hours of pro bono service during the 2015 calendar year.

To learn more about the North Star Lawyer award, please visit the Minnesota State Bar Association website.


Established in Minneapolis in 1929, Meagher & Geer has earned a reputation as one of the leading litigation defense and insurance coverage firms in the Upper Midwest. We offer 80 lawyers in 20 practice areas. From our offices in Minneapolis, Minnesota, Bismarck, ND, and Phoenix, Arizona, we represent public and private businesses of all sizes, non-profit organizations, and individuals. 

Our attorneys are licensed in several states, including Arizona, California, Georgia, Iowa, Illinois, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, North Dakota, South Dakota, Texas, Utah, Virginia, and Wisconsin.

Molly R. Ryan




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