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Update on FLSA Presentation at the 2016 Convention

Monday, December 12, 2016  
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UPDATE ON FAIR LABOR STANDARDS ACT PRESENTATION

 

Hot Topic #1 - Increase in Salary Test – COURT INJUNCTION

 

As discussed at the 47th Annual Convention in Orlando FL the US Dept. of Labor revised the minimum salary requirement in the Overtime Provision of the Fair Labor Standards Act to a minimum annualized salary of $47,476 effective 1/1/2017.

 

Currently law requires a minimum annualized salary of $23,660.

 

On Tuesday November 22nd, a federal Judge granted an injunction requested by plaintiffs (comprising 21 states) who filed a lawsuit to halt to the upcoming minimum salary requirement increase.

 

As such, the implementation of this law has been halted until the judge can issue a final decision on the case.

 

The judge’s final ruling will not be known for some time – but until the judge makes his decision the current minimum annualized salary of $23,660 remains in effect.

 

Hot Topic #2 - Commission Employees

 

Non-Discretionary Commissions (meaning that they are part of a compensation program) are included to satisfy up to 10% of the salary test.

 

For example, you can currently include $2,366.00 in commissions towards an employee reaching the current salary minimum of $23,660.00.

 

An employee’s non-commission annual salary needs to be an additional $21,294 to meet the current minimum test or roughly $409.50 per week in regular non-commission salary wages.

 

Keep in Mind that IN ADDITION to the Minimum Salary Requirement you must satisfy the Executive, Administrative, or Professional Over-Time Exceptions as Reviewed in the Seminar.

 

Additional Q&A on Commissions

 

NONDISCRETIONARY BONUSES AND INCENTIVE PAYMENTS

 

1. Q. May employers use bonuses to satisfy part of the new standard salary level test?

 

Yes. The Department is changing the regulations to allow nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary test requirement. Such bonuses include, for example, nondiscretionary incentive bonuses tied to productivity or profitability (e.g. a bonus based on the specified percentage of the profits generated by a business in the prior quarter). The Department recognizes that some businesses pay significantly larger bonuses; where larger bonuses are paid, however, the amount attributable toward the EAP standard salary level is capped at 10 percent of the required salary amount.

 

For employers to credit nondiscretionary bonuses and incentive payments (including commissions) toward a portion of the standard salary level test, such payments must be paid on a quarterly or more frequent basis.

 

2. Q. What's the difference between a discretionary bonus and a nondiscretionary bonus?

 

Nondiscretionary bonuses and incentive payments (including commissions) are forms of compensation promised to employees to induce them to work more efficiently or to remain with the company. Examples include bonuses for meeting set production goals, retention bonuses, and commission payments based on a fixed formula.

 

By contrast, discretionary bonuses are those for which the decision to award the bonus and the payment amount is at the employer's sole discretion and not in accordance with any preannounced standards. An example would be an unannounced bonus or spontaneous reward for a specific act.


48th Annual Convention


Register now for the 48th Annual Convention which will be held Nov. 13-15, 2017 at the Sheraton Grand Wild Horse Pass in Phoenix, AZ. Find out more! 


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